OREANDA-NEWS. February 28, 2011. Volkswagen Group Rus submitted a memorandum of intent to the Ministry of Economic Development of the Russian Federation, confirming its interest in the new "industrial assembly" conditions defined by the new version of Decree 166, reported the press-centre of GAZ Group.

Also today, Volkswagen Group Rus and GAZ Group, part of Oleg Deripaska’s ‘Basic Element Group’,  have come to an agreement on the manufacturing of Volkswagen and Skoda models at GAZ production facilities in Nizhniy Novgorod.

Full scale production of Volkswagen and Skoda cars, including welding, painting, and assembling, will be organized at GAZ’s passenger car facility, which conforms to international manufacturing standards, has a high degree of automation and flexibility as well as highly qualified staff. The total volume of production will be more than 100.000 cars per year.

The project involves an increase of utilization of GAZ’s facility with Volkswagen Group Rus bringing product-specific tooling and equipment as well as training GAZ employees for their new task. 2,500 GAZ employees will be involved in the project.

Marcus Osegowitsch, General Director of Volkswagen Group Rus, said: "The Volkswagen Group is highly interested in further developing its operations for the promising Russian market. The cooperation with GAZ gives us a unique opportunity to expand our production capacity in a fast way. We are very happy to find in GAZ Group a strong Russian partner who is at the same time familiar with western production and management standards. The production site in Nizhniy Novgorod gives us also flexibility in regards to production and logistics. At our production site in Kaluga we will focus on extending production of Volkswagen Polo Sedan and the introduction of new models".

Bo Andersson, President of GAZ Group: "We are glad that our negotiations with the Volkswagen Group have been shaped into this framework agreement. The decision taken has become possible due to a modernization made at GAZ during last years in terms of production efficiency and quality standards. The cooperation with Volkswagen Group enables GAZ to increase capacity utilization and to attract cutting edge technologies".

The final agreements between Volkswagen Group Rus and GAZ Group is planned to be signed later this year.