VW Extends Car Production Deal with Russia’s GAZ

Volkswagen AG has extended an agreement with GAZ Group, Russia’s largest maker of commercial vehicles, to continue assembling Skoda and VW brand cars and SUVs until 2025.

VW also will supply GAZ with 2.0-liter diesel engines from its plant in Salzgitter, Germany, for use in GAZ’s light commercial vehicles. Separately, VW’s truck and bus unit has signed a letter of intent to study long-term collaboration in commercial vehicles, including shared production of parts.

GAZ began assembling VW vehicles on a contract basis at its Gorky plant in Nizhny Novgorod in 2011. The program included an investment of €300 million ($335 million) to add new assembly and body shops and modernize other operations at the factory. The partnership has produced about 200,000 vehicles to date.

The Gorky complex, which has annual capacity to make 132,000 vehicles, currently builds VW Jetta sedans and Skoda Yeti small SUVs and Octavia family sedans. VW says the partnership extension could lead to additional models.