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19 Mar, 2023 05:12

Russia exit costs EU automaker over $700 million

Skoda is now in the final stages of talks over an asset sale, the company’s CEO says
Russia exit costs EU automaker over $700 million

Czech carmaker Skoda Auto, a unit of Germany’s Volkswagen, is closing in on a deal to sell its assets and exit Russia, the company’s CEO Klaus Zellmer announced this week.

Skoda has taken a hit of almost €700 million ($742 million) from exiting its second largest market due to disruptions in logistics chains caused by Western sanctions. Exports of cars and spare parts to Russia have also been stopped.

“The Volkswagen Group has analyzed various scenarios for the future of our business options in Russia,” Zellmer told reporters, adding that “the preferred option is to sell the assets of Volkswagen Group Russia... to a third party.”

He declined to give details on the deal until they are agreed by all parties, but noted that talks on the sale were “in the final stages.”

The automaker, which produced about 780,000 cars globally in 2022, suspended production at its two Russian factories in Kaluga and Nizhny Novgorod shortly after Ukraine-related sanctions were imposed by the EU. The facility in Kaluga has a production capacity of 225,000 vehicles per year, and assembled the Volkswagen Tiguan, Volkswagen Polo, and Skoda Rapid.

Last year, Skoda’s production in Russia plummeted to 18,300 cars from the 90,400 delivered in 2021, according to official data.

The carmaker’s net profit slumped 11.7% to €489 million in 2022, affected by a sharp rise in raw material prices and global supply chain disruptions.

For more stories on economy & finance visit RT's business section

 

 

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