Volkswagen is to slash its production in Russia by 13% next year, a top executive said yesterday (4 December).

Russian unit head Martin Jahn told Kommersant the decision was made due to falling demand.

The Kaluga plant expects to produce 100,000 vehicles in 2009, compared to the 115,000 originally scheduled. There were even suggestions the plant could produce 150,000 Skoda and VW cars if market conditions were right.

Earlier this week, just-auto reported that the Russian government is preparing new measures to support domestic automobile producers. Russia’s industry and trade minister Viktor Khristenko voiced concerns that investors in Russia’s auto industry should be supported at a meeting with president Dmitry Medvedev.

It is thought the government will possibly subsidise interest rates on loans that car producers pay to banks. State assistance for Russian carmakers was written into a US$200bn state aid package, including a provision to lower interest rates on loans taken by car manufacturers.

Early this month, the government also sharply raised import tariffs on second-hand foreign cars, a protectionist measure for which the industry has long lobbied.
Although activity has weakened lately, Russia’s automobile output increased 14.5% year on year to 1,558,687 units in January-October, ASM Holding, which monitors Russia’s automotive sector, recently said.
Car output increased 19.6% to 1,265,321 units in January-October, while truck output rose 5% to 238,588 units in the period. Foreign brand car output was up 41.1% to 516,281 units and foreign brand truck production rose 22.6% to 16,049 units.
In 2007, Russia’s vehicle output rose 10.4% to 1.660m units, including 1.289m cars and 287,914 trucks, the company said earlier.