In response to dwindling sales, VW’s plant in Kaluga, located about 100 miles south of the Russian capital, will operate just four days a week between April and July. The plant will also eliminated one of its three shifts indefinitely beginning in May.
VW also outlined plans to shutter the plant for two weeks in May to prevent a buildup of inventory.
“In the first months of 2015 the Russian auto market continued to feel the impact of a weak economy, significant price increases and high interest rates. We don’t expect that to change in coming months,” VW told Reuters in an emailed response.
The combination of sanctions over Ukraine and a fall in oil prices have hit Russia’s economy hard, drying up consumer demand for pricey investments like cars. So far this year Russian car sales are down 32 percent, prompting Nissan to suspend production in the country for 16 days this month. General Motors, meanwhile, has decided to pull its Opel brand from the Russian market altogether.
Despite the grim short-term outlook, VW says it remains committed to the Russian market. The automaker will soon open a new parts warehouse and engine plant in the country, with the automaker offering some of those laid off from its car plant new positions at those facilities.
“The Russian market still has a significant growth potential long-term,” VW said in a statement.
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