Volkswagen Offers Russian Employees An Exit Plan

On Thursday, Volkswagen announced it will offer pay-outs to its Russian employees currently working at the brand’s Nizhny Novgorod factory in Russia. Recently, Volkswagen announced it was suspending production of Russian vehicles in light of Russia’s violent invasion of Ukraine. Production will not continue in Russia until further notice. In addition to the Nizhny plant, VW shuttered its Kaluga plant as well.

The pay-outs include financial compensation in the form of six months of salary and health insurance until the end of 2022. VW has made the plan available to roughly 200 of the Nizhny plant personnel. Prior to its shutdown, somewhere in the neighborhood of 4,200 Russians worked at the Kaluga plant, which manufactured vehicles like the Volkswagen Jetta and Skoda Yeti alongside Nizhny.

Part of this comes down to VW’s ownership of its two Russian plants. The German automaker owns its Kaluga plant outright, but it doesn’t own the Nizhny plant. Instead, the automaker has a contractual agreement with the plant’s owner, GAZ Group. GAZ is a Russian automotive conglomerate, which calls Nizhny Novgorod it’s home.

Across Russia, the group owns 18 manufacturing facilities. The group is also the leading manufacturer of commercial vehicles in Russia. The GAZ Group has been sanctioned by the US Government since 2018, long before Russia’s recent invasion of Ukraine.

As a result of the VW plant closures in Russia, the Volkswagen Group has had to make other plans. CEO Herbert Deiss has previously said that VW’s American and Chinese production plants will have to pick up the slack left by the closure of its Russian facilities.

At least in America, VW factories and dealers are happy to share the burden. It means more vehicles produced in one of the planet’s hungriest automotive markets, which will help offset the costs of leaving the Russian market, at least for the foreseeable future. As of now, Volkswagen has not announced a timeline for its return to Russian soil, if it will return at all.

Moreover, it remains unclear whether Volkswagen plans to further assist its Russian workers. With the Russian economy in shambles, the country’s citizens are suffering far more than those responsible for the country’s brutal campaign in Ukraine.