Volkswagen and GAZ Sign Agreement for Contract Manufacturing in Russia

Volkswagen and GAZ Group today signed an agreement to assemble Volkswagen and Škoda models under contract at the GAZ plant in Nizhny Novgorod. The companies already concluded a memorandum of understanding regarding joint automobile production in Russia in February 2011. The planned production volume is 110,000 vehicles per year. The agreement runs until 2019.

Under the contract manufacturing agreement, GAZ is to build the Volkswagen Jetta, Škoda Octavia and Škoda Yeti models for the Russian market. In order to respond swiftly to fast-growing demand in the Russian automobile sector, the first model to be built by GAZ, the Škoda Yeti, is to start rolling off the production line by the end of 2012.

The collaboration with GAZ is based on an additional agreement to Decree 166 relating to customs duties benefits which was concluded with the Russian government at the end of May. Back in February, the Volkswagen Group and the GAZ Group signed a memorandum of understanding regarding joint automobile production in Russia.

Investment in production at Nizhny Novgorod will amount to some €200 million. This covers expanding and modernizing existing paint shop and assembly facilities as well as setting up a new body shop.

In addition, Volkswagen and GAZ will be implementing a comprehensive training program for employees in Nizhny Novgorod, thus ensuring that the locally produced models meet the Volkswagen Group’s global quality standards.