Volkswagen has chosen Kaluga, southwest of Moscow, as the site of its Russian production plant.
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According to The Associated Press, Volkswagen chairman Bernd Pischetsrieder signed an agreement with trade and economic development minister German Gref to build a nearly EUR400m ($510m), 115,000-vehicle plant in the city.
“The decision took a long time … this was not a fast path and our competitors have overtaken us to an extent – we’ll have to be all the more active,” Pischetsrieder reportedly said.
“This decision is of major strategic significance for the group,” Pischetsrieder had said earlirt in a statement cited by Dow Jones. “It ensures we will be able to substantially increase our share of the rapidly-growing Russian automotive market over the coming years.”
VW whittled down an initial list of 70 locations to a shortlist of five, as last reported in April. Kaluga offered the best conditions, the company said, according to the news agency.
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By GlobalDataIn a first step, semi knocked-down VW and Skoda brands will be assembled in Kaluga starting in the second half of 2007. The Skoda Octavia will be the first model to leave the plant.
This SKD method is also used to build Skodas in India.
Initially, about 20,000 units will be produced annually in Russia. At the same time, full production facilities including body shop, paint shop assembly lines will be installed, Dow Jones said.
