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2015-03-24 14:24

PRODUCTION CUTS: The famous VW badges wait to be installed in the next vehicle after the company announced cuts in Russia. Image: Volkswagen

MOSCOW, Russia - Volkswagen has announced cuts to the workforce and working hours at its plant in Russia because of weak demand.

Spokesperson Lilia Leonova said the company was offering "balanced compensation packages to those of its staff ready to leave the company by mutual agreement".

Europe's biggest automaker did not divulge how many jobs would be cut but said it was also reducing the working week at its Kaluga plant (150km south-west of Moscow) from five to four days from April to July.


Leonova blamed the weak economy, significant price rises and high interest rates for the market slump. Russia's rouble has also depreciated severely in recent months.

"We do not expect changes in these factors in the coming months," she said.

The Russian car market, which had been expected to become the biggest in Europe earlier this decade, has slumped over the past months as the country's economy and its currency, the rouble, have taken a beating from falling oil prices and Western sanctions over the Ukraine crisis.

The rouble has lost more than half of its value against the dollar and euro over the past year, resulting in huge price rises for imported cars. In February 2015 auto sales fell by almost 40% on a year-on-year basis, according to the Association for European Business, a Moscow-based lobbying group.

General Motors and its German subsidy, Opel, announced mid-March 2015 that it was ceasing production in Russia. VW, whose sales there dropped 49% year-on-year in February, built the plant in Kaluga in 2006 to circumvent high tariffs for imported cars.

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