Avilon is about to buy Volkswagen factory in Russia
The Commission on Monitoring Foreign Investments under the government of Russia has approved a €125 million deal between Avilon, a car dealer in Russia, and Volkswagen, which was looking for a buyer of its assets in Russia, the Interfax news agency reported, citing a person familiar with the matter.
Avilon Group has obtained permission to acquire Volkswagen’s subsidiaries in Russia such as Volkswagen Group Rus, Volkswagen Parts and Services, Scania Leasing, Scania Finance and Scania Insurance. According to an undisclosed person familiar with the matter, the permission was issued back on April 17.
Avilon has been considered the main buyer of VW’s assets in Russia for a long time. In April 2023, Minister of Industry and Trade of Russia Denis Manturov said that the deal is almost ready, although both VW and Avilon refused to comment. However, earlier in March, Volkswagen confirmed that it was negotiating the deal with a Russian investor.
VW factory in Kaluga is capable of producing up to 225,000 cars a year. An engine factory nearby can produce 150,000 engines per year. Before spring 2022, the German company produced Volkswagen Polo, Tiguan and Skoda Rapid at its production site in Kaluga.
The company also produced three Skoda models (Octavia, Karoq and Kodiaq) and Volkswagen Taos at the GAZ auto factory in Nizhniy Novgorod. VW stopped this production in March 2022. Even though VW and GAZ were supposed to cooperate until 2025, in August 2022, they agreed to break the contract. However, in March 2023, GAZ filed a lawsuit against VW. The plaintiff said that VW’s intention to stop cooperation has harmed its business on contract assembly and caused losses in profit. To VW’s surprise, GAZ demands it pays $195 million and $355 million, respectively, for both accusations.
According to Der Spiegel, this conflict may be the result of an idea to restore the once famous Volga brand, Siegfried Wolf, a former chairman of the company’s board of directors, allegedly came up with during his meeting with President Vladimir Putin in January 2023. Under this plan, GAZ needs $735 million to start production of Volga based on Skoda conveyer in Nizhniy Novgorod.
Initially, a Russian court supported GAZ’s claims and decided to seize VW’s property. However, it quickly changed its mind and lifted all those restrictions. Some media outlets in Kazakhstan reported that Kazakhstani Allur was interested in purchasing the VW factory but it later quit the race for the asset.
Astana Motors, another automaker from Kazakhstan, is allegedly interested in the Hyundai auto factory in Saint Petersburg, which is currently out of operation. According to Kommersant, Denis Kolomatsky, a former top manager from Astana Motors, has shown great interest in the asset. He has established a company Vostok-Auto Management, which is deemed to assemble cars and sell them in Kazakhstan. Later, the South Korean MBC channel reported that Hyundai was seeking permission to sell its factory in Russia. During this reportage, the TV channel showed a building with the Astana Motors logo on it. Nevertheless, the company has denied any interest in the Hyundai factory in Russia.
