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Volkswagen and GAZ have confirmed recent rumours of a production joint venture in Russia.

The two automakers said they would build over 100,000 Volkswagen and Skoda cars a year at GAZ’s plant.

According to Reuters, Volkswagen also said it had submitted a memorandum of intent to the Russian government confirming its commitment to new manufacturing criteria, a move that could qualify the firm for a raft of incentives including lower customs tariffs on imported parts.

“The Volkswagen Group is highly interested in further developing its operations for the promising Russian market … GAZ Group (is) a strong Russian partner … familiar with western production and management standards,” Volkswagen’s Russia chief Marcus Osegowitsch said in a statement.

Recent Russian government measures gave foreign carmakers until 28 February to submit a memorandum of intent to the government stating their plans for Russian manufacturing. Ford and General Motors are among the companies finalising plans.

Volkswagen also has its own plant in Russia which last year began switching from SKD to CKD kit assembly, raising the amount of labour and parts sourced in the country to comply with stricter regulations.

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By GlobalData