A court in Nizhny Novgorod on the Volga has confiscated the assets of the Wolfsburg car group in Russia following a lawsuit by former VW partner Gaz. Gaz has therefore applied for the termination of the assembly contract in the local joint plant to be declared void and Volkswagen to be fined 15.6 billion rubles (around 190 million euros), the Interfax news agency reported on Monday, citing the court file. At Europe’s largest carmaker, it said: “We are aware of Gaz’s claim and are currently examining the materials on this case.” At the same time, they said they were “surprised to receive the demands at exactly this point in time”.

Actually, the separation of the two former partners has long been considered a done deal – at least from the perspective of the Germans. Several models of the VW core brand and the Czech subsidiary Skoda were assembled in the factory in Nizhny Novgorod. After US sanctions against Gaz over the Russian war in Ukraine came into effect in May 2022, Volkswagen withdrew from co-manufacturing and offered employees severance pay.

Production had already been discontinued – as at VW’s own plant in Kaluga, 150 kilometers south-west of Moscow. The group is now negotiating the sale of its shares in the national company Volkswagen Group Rus, which also operates offices in the capital Moscow. If a buyer is found, it would be de facto the complete withdrawal of the German company with the highest turnover from the Russian market. VW imports have been suspended for a long time. The truck brand MAN also no longer produces in the country.

Will a decision be made soon?

A prospective buyer for the parts of the company with around 4,000 employees in Kaluga and another 300 in Moscow is said to be the Avilon car dealership group. However, such transactions must first be approved by the Russian authorities. Volkswagen has not yet been able to report any implementation. According to information from company circles, a decision was expected to be made soon.

The group did not want to officially comment on further details about the processes on Monday. However, he was surprised at the development of the Nizhny Novgorod case: “We hope that the lawsuit will not delay the transaction, which also aims to secure employment and work for the employees concerned.” Business relations with Gaz have been good for many years, and the termination last year was “amicable”.

Volkswagen had long viewed the Russian Federation as a promising growth market. The beginning of the war at the end of February 2022 meant a major turning point for the entire automotive industry and for numerous other sectors. In Nizhny Novgorod there was no complete construction of cars – instead, finished groups of parts and systems were delivered and finally assembled into vehicles. In Soviet times the factory was known for the Volga sedans.