December 12, 2012

Volkswagen Group lays foundation stone for new engine plant in Russia

Volkswagen is stepping up its industrial activities in Russia. From 2015, the Group is to supply its vehicle assembly plant at Kaluga and contract production at the GAZ plant in Nizhny Novgorod with highly advanced engines produced locally. The official foundation
laying ceremony for the new engine plant was attended today by Russian Prime Minister Dmitry Medvedev as well as Anatoly Artamonov, the Governor of Kaluga Oblast, and Dr. Michael Macht, Member of the Board of Management of Volkswagen Aktiengesellschaft responsible for Group Production.

"The cornerstones of our success in Russia are our Russian production facilities. The new engine plant at Kaluga will add the highly advanced component technology required by our local production capacities, thus strengthening our position on the Russian market," said Dr. Macht during the ceremony in Kaluga.

The new engine plant is being built on a site with an area of 30,000 sq m in the immediate facility of the Volkswagen vehicle plant at Kaluga. The plant is designed for an annual capacity of 150,000 units. The engine to be produced at Kaluga in the future will be a 1.6-litre petrol engine from the EA 211 series, representing Volkswagen's most modern engine technology. The start of production is scheduled for the beginning of 2015.

The Volkswagen Group is the largest foreign automobile investor in Russia. Since 2006, the Group has invested about €1 billion in local production and new models for Russia. Only a week ago, the Group announced that it would be investing a further €840-million in Russia over the next three years. Of this amount, the construction of the new engine plant will account for about €250-million. A contract for the plant was signed in August this year in Moscow by Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, and Governor Anatoly Artamonov.

With the new engine plant, Volkswagen will ensure that at least 30 per cent of the vehicles produced in Russia are equipped with locally manufactured engines by 2016. In doing so, the Group will be meeting the targets set in the additional agreement to Decree 166 signed with the Russian government at the end of May 2011. The maximum annual capacity at the Kaluga plant is currently 225,000 vehicles. The Group will probably produce about 175,000 vehicles there this year (2011:135,000). Future annual capacity at Nizhny Novgorod, in the first stage of development, will be about 110,000 vehicles. Production is due to start there next year.

For the Volkswagen Group, Russia is currently its sixth-largest individual market, after China, Germany, Brazil, the USA and Great Britain. In 2012, the Group will deliver more than 315,000 vehicles to Russian customers, corresponding to growth of 38 per cent compared with the previous year. More than half of these vehicles already come from local production. In the long term, the Volkswagen Group plans to sell 500,000 vehicles per year in Russia by 2018.


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