Volkswagen (VW) is planning to slash production at its Russian facility in Kaluga by 20% this year, according to a report in Automobilwoche, cited by Reuters. The company originally planned to manufacture 150,000 units in 2014 at the plant, which builds a selection of VW Group products, including the VW Polo and Tiguan and the Skoda Fabia and Octavia. A VW spokesperson refused to conform the precise production forecast for 2014 but he did confirm that the plant will shut for ten days starting today (8 September). The spokesperson added, "Nevertheless [VW] is fully committed to the Russian market and is consecutively fulfilling its investment programme in Russia".
Significance: It is hardly surprising that VW is looking to cut back production volumes in Russia given the accelerated slump that the market is currently experiencing with a 23.9% y/y decline occurring in July, and having fallen 10% in the first seven months of the year. August's figures are due out this week and they are also likely to be poor. VW's Kaluga plant posted a production figure of 157,000 units in 2014, and IHS forecasts production for this year prior to this report of 137,000 units. AvtoVAZ last week also announced that it was halting production of some models in September and no doubt other OEMs will follow suit if the market continues to deteriorate, although the recently announced scrappage scheme may help with momentum for lower-priced models.
