VOW3 Volkswagen AG

By Mauro Orru

Volkswagen AG is requesting approval from Russian authorities to sell its subsidiary in the country, a year after it suspended activities there following Russia's invasion of Ukraine and just days after a Russian court froze Volkswagen's assets in the country.

A regional arbitration court in Nizhny Novgorod, a city on the Volga River east of Moscow, froze the stakes that Volkswagen and other subsidiaries own in Volkswagen Group RUS, the group's subsidiary in the country, according to a court document dated March 17. The court also prohibited some local authorities from processing requests related to the potential liquidation or reorganization of Volkswagen Group RUS.

Last year, the subsidiary stopped production and imports of all Volkswagen brands, including Audi, Porsche and Skoda. However, Volkswagen still has assets in Russia, including a plant in Kaluga that put out some 118,000 vehicles in 2021, according to Volkswagen data.

"Volkswagen is in the process of applying for approval by Russian state authorities for selling its shares of Volkswagen Group RUS, and thereby also the Kaluga plant with its more than 4,000 employees to a reputable Russian investor," a company spokesman said Monday, though he declined to elaborate.

The court decision stems from a lawsuit launched by Russian automotive manufacturer GAZ to claim more than 15.5 billion rubles ($201.4 million) worth of damages from Volkswagen, after the German company suspended production last year. Volkswagen and Skoda models were being produced in Nizhny Novgorod under a contract with GAZ.

"We hope that the claim will not lead to a delay of the transaction, which aims to secure employment and work for the affected employees," Volkswagen's spokesman said of the planned divestment.

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

(END) Dow Jones Newswires

March 20, 2023 09:44 ET (13:44 GMT)

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