Court freezes all Volkswagen assets in Russia . Volkswagen, along with other foreign carmakers, halted op

Court freezes all Volkswagen assets in Russia .

Volkswagen, along with other foreign carmakers, halted operations in Russia last year after Western countries imposed unprecedented sanctions on Moscow over the conflict in Ukraine.

Volkswagen is trying to sell its Russian assets, including its flagship plant in the city of Kaluga with a capacity of 225,000 cars per year, which has been furloughed since March 2022.

Russian automaker GAZ has contracted to produce Volkswagen cars at its Nizhny Novgorod plant, after Volkswagen terminated production as part of a lawsuit against the German automaker, which GAZ says is in breach of contract and seeks to stop any Agreement of sale for August.

In court documents, GAZ said Volkswagen was endangering itself by trying to leave the Russian market, and demanded 15.6 billion rubles ($201.3 million) in damages for canceled contracts.

A Russian court on Monday agreed to freeze all of Volkswagen’s assets in Russia, while the dispute with GAZ continues, with court documents showing a further blow to VW’s attempt to wind down its Russian operations.

Czech automaker Skoda Auto, part of Volkswagen Group, said earlier this week that it was in the final stages of a deal to sell its Russian assets.

Exit plan

Russia requires companies from “unfriendly” countries – those that have sanctioned Russia – to get approval from a government committee to sell Russian assets.

Foreign investors fear that Russia may nationalize strategic assets since imposing sales restrictions.

In July last year, President Vladimir Putin issued a decree to take full control of the Sachlain-2 gas and oil project in the Russian Far East, effectively taking over nearly 50% of Russia’s gas and oil projects Shell and two Japanese trading Company’s project.

Other leading Western automakers have withdrawn from the Russian market. Last year, France’s Renault sold its majority stake in Avtovaz to a Russian state entity for a nominal fee of 1 ruble – effectively writing off assets previously worth 2.2 billion euros ($2.35 billion).

Russia’s auto industry is one of the hardest hit by Moscow’s decision to send tens of thousands of troops to Ukraine last February.