Russia's deadly invasion of Ukraine is in its second week now and it continues to affect businesses operating within the region in a major way. Russian President Vladimir Putin's decision to inflict violence in Ukraine has impacted the auto industry in particular, with Volkswagen the latest carmaker to suspend its operations in Russia.
Volkswagen made the announcement via a press release on Thursday, March 3. The German automaker opened its message by stating its dismay and shock with the war in Ukraine and for Russia to stop its hostilities in the region.
With the Russian onslaught still ongoing, the Group Board of Management of Volkswagen AG made the decision to stop the production of its vehicles in Russia until further notice. The temporary closure affects Volkswagen's production facilities in Nizhny Novgorod and Kaluga.
Apart from the production stoppage, Volkswagen has also decided to stop vehicle exports to Russia immediately. Volkswagen concluded its statement by saying "With the extensive interruption of business activities in Russia, the Executive Board is reviewing the consequences from the overall situation, during this period of great uncertainty and upheaval."
Closing the Russian plants is a big blow for Volkswagen as those facilities play a key role in the company's global vehicle production. Volkswagen's Nizhny Novgorod plant currently builds the Taos model as well as three other Skoda models: the Karoq, Octavia, and Kodiaq. The company's Kaluga plant currently assembles the Audi Q7 and Q8. It also builds the Skoda Rapid as well as the 2022 Volkswagen Tiguan and Polo.
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Volkswagen joins Toyota Motor Corporation, Daimler Truck, AB Volvo, Ford Motor Company, Renault, Hyundai Group and Mitsubishi Motors in the list of automakers that have halted vehicle production in Russia because of the war.
Toyota announced on Wednesday that it would halt production at its St. Petersburg facility starting on Friday. That plant manufactures Camry and RAV4 models, mainly for the Russian market.
Daimler Truck was among the first automakers to suspend its operations in Russia, announcing on Monday its decision to halt all of its business activities in the country, including their joint venture with Russian truck manufacturer Kamaz.
Daimler's former parent company Mercedes-Benz also decided to cut its ties with Russia, announcing that it would divest its 15 percent stake in Kamaz. Ford announced on Tuesday that it has suspended its operations in Russia until further notice, that being the company's joint venture with Russian firm Sollers.
Renault and Hyundai also announced that they were suspending operations in Russia but the reason that they gave for the work stoppages are supply chain shortages. With Western sanctions against Russia already taking effect, parts have been hard to come by in the country, causing disruptions to the companies' vehicle production. Russia is a big market for both Renault and Hyundai, so they may try not to stop their operations there if it can be helped.
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