OREANDA-NEWS. June 16, 2011. VOLKSWAGEN Group Rus and GAZ Group, part of Oleg Deripaska’s ‘Basic Element’, have come to an agreement on contract manufacturing of Volkswagen and Skoda cars at GAZ plant in Nizhny Novgorod.

Under the agreement, full-cycle production of the new Volkswagen Jetta, Skoda Octavia, and Skoda Yeti will be organized at GAZ. The total volume of production will be more than 100 thousand cars per year.

GAZ will act as contract manufacturer for VOLKSWAGEN Group Rus. Responsibility for product, quality and distribution will be with VOLKSWAGEN Group.

The plant investments will amount to €200 million, including GAZ passenger car facility upgrade and new product-specific equipment. VOLKSWAGEN and Skoda production will be organized at GAZ passenger car assembly line that will be used exclusively for the Volkswagen Group production, and a new welding complex will be constructed at the plant.

All processes and training of the employees will be organized in a way that the cars will meet the worldwide VW group quality standards.

Start of full-cycle production of the first car which is to be assembled at GAZ, Skoda Yeti, is planned for the fourth quarter 2012.

The agreement is valid until 2019, however the parties do not rule out the possibility that cooperation could be continued beyond this date.

Bo Andersson, President\CEO of GAZ Group: ‘On behalf of GAZ people, I am proud to announce this great project that will open up new opportunities for GAZ and Nizhny Novgorod region. The cooperation with Volkswagen is based on professionalism of GAZ team and on our commitment to produce quality cars for customers. A joint project with Volkswagen will allow us to upgrade our production facilities, to develop our competences and to retain GAZ Group’s leadership in the commercial vehicles market”.

Detlef Wittig on behalf of VOLKSWAGEN AG: “After having signed the “Supplementary Agreement” with the Russian Government end of May we are now ready for the next step towards expanding our industrial engagement in Russia. We are adding a contracted capacity of 110.000 cars for our both brands Volkswagen and Skoda, in addition to our existing capacity at the Kaluga plant, which we also continue to increase. We are looking forward to a very good cooperation with our manufacturing partner GAZ.

Marcus Osegowitsch, General Director of VOLKSWAGEN Group Rus: “The signing of this agreement gives VOLKSWAGEN Group Rus a great chance to follow the strong market growth in Russia, to increase our market share, to produce according to the world level VOLKSWAGEN AG quality standards in Russia and to fulfill the wishes of our customers for excellent cars”.