Russia's GAZ Group Suing Volkswagen for $348 Million

Matt Posky
by Matt Posky

Russia’s Gorky Automobile Plant (Gorkovsky Avtomobilny Zavod or GAZ) is suing Volkswagen Group over vehicles it was contracted to assemble but never had the opportunity to after the German automaker pulled out of the market at the start of the Russo-Ukrainian War.

This is the second lawsuit launched by GAZ, with the first seeking 15.6 billion rubles ($201.3 million USD) in damages due to VW having terminated its contract for the factory located in Nizhny Novgorod.

According to Automotive News, the latest suit involves GAZ hoping to recover 28.4 billion rubles ($348 million USD) as plants have remained idle.

While the details of the lawsuit have not yet been published, documents were filed with the Nizhny Novgorod regional court on April 7th. VW has declined to comment on the matter, and likely won’t until more information about the suit becomes publicly available.

From Automotive News:

VW halted operations in Russia in March 2022, shortly after Moscow ordered tens of thousands of troops into Ukraine. A court froze the company's assets in Russia on March 17, but that order was lifted on April 3.
Volkswagen plans to sell its Russian assets including a car plant in Kaluga with a capacity of 225,000 vehicles a year, but has not yet made a decision on the disposal. It is in the process of applying for approval of the sale by Russian government agencies, VW has said.
VW plants in Kaluga and Nizhny Novgorod ceased production in March last year after the company announced the suspension of operations in Russia until further notice. In the summer the company decided to close the Nizhny Novgorod site.

It’s been quite a mess since VW formally pulled out of the region in August. In March of 2023, Russian courts agreed to freeze all of Volkswagen’s lingering assets until the dispute with GAZ has been settled — stalling any prospective sale.

The Russian subsidiary was reportedly surprised by the lawsuits, claiming in the press that the partnership had "ended on mutually-agreed terms.” Though the reality was that this all happened extremely fast after the war began and the German company just seems to want to sell Volkswagen Group Rus off to a “to a trustworthy Russian investor” without much fuss. Why it assumed the Russian government would be eager to bend over backward to help this endeavor is anyone’s guess, however.

[Image: FotograFFF/Shutterstock]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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3 of 27 comments
  • Jpolicke Jpolicke on Apr 11, 2023

    Offer to negotiate face-to-face with Putin directly. At the International Criminal Court. If any down payment or progress payments were received, VW should twist the knife by announcing that all funds would be donated to Ukrainian relief.

    • Slavuta Slavuta on Apr 11, 2023

      "Putin was my guest at a July 4th reception in St. Petersburg in 1995, when I was serving as the U.S. Consul General there. I recall taking him into my library. ... he was representing his boss, Mayor Anatoly Sobchak, who was off on a trip. Of course, I hadn’t the faintest idea that this man was destined to become the President of the Russian Federation.... On one occasion I called Putin for help when some young American investors from California who had set up a Subway fast-food restaurant with Russian partners arrived at the Consulate General pursued by the mob. The Russian side of the 50-50 venture had learned how to make sandwiches and had called in “muscle” from the criminal world in order to evict the Americans and take over the business. I called Putin for assistance. His first reaction was to say that he needed a copy of the contract. He also assured me that he would order the mob to back off so that our citizens could safely make it to Helsinki, as they feared for their physical safety. The matter would then need to go to court (which it eventually did). That was what Petersburg was like in the 1990s. Some called it the Wild East. I was struck at the time by Putin’s immediate reaction in wanting to see the contract. It was the reaction of one trained in law, as Putin had been, and intent on seeing that the matter was resolved in accordance with the law."

      -- John Evans ( U.S. Consul General in RF)

      "At the International Criminal Court" - I thought, US will go to war with Netherlands if American is prosecuted by this court. Sovereign countries don't sign on it

      "donated to Ukrainian relief" - Since Ukraine will be part Poland, part Russia...

      What I believe is happening there, Russia is waiting a bit and then they will start making same car under some different brand.

  • FreedMike FreedMike on Apr 12, 2023

    Germany: sure, we'll pay...right after you turn the natural gas back on.

  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.
  • Tassos Under incompetent, affirmative action hire Mary Barra, GM has been shooting itself in the foot on a daily basis.Whether the Malibu cancellation has been one of these shootings is NOT obvious at all.GM should be run as a PROFITABLE BUSINESS and NOT as an outfit that satisfies everybody and his mother in law's pet preferences.IF the Malibu was UNPROFITABLE, it SHOULD be canceled.More generally, if its SEGMENT is Unprofitable, and HALF the makers cancel their midsize sedans, not only will it lead to the SURVIVAL OF THE FITTEST ones, but the survivors will obviously be more profitable if the LOSERS were kept being produced and the SMALL PIE of midsize sedans would yield slim pickings for every participant.SO NO, I APPROVE of the demise of the unprofitable Malibu, and hope Nissan does the same to the Altima, Hyundai with the SOnata, Mazda with the Mazda 6, and as many others as it takes to make the REMAINING players, like the Excellent, sporty Accord and the Bulletproof Reliable, cheap to maintain CAMRY, more profitable and affordable.
  • GregLocock Car companies can only really sell cars that people who are new car buyers will pay a profitable price for. As it turns out fewer and fewer new car buyers want sedans. Large sedans can be nice to drive, certainly, but the number of new car buyers (the only ones that matter in this discussion) are prepared to sacrifice steering and handling for more obvious things like passenger and cargo space, or even some attempt at off roading. We know US new car buyers don't really care about handling because they fell for FWD in large cars.
  • Slavuta Why is everybody sweating? Like sedans? - go buy one. Better - 2. Let CRV/RAV rust on the dealer lot. I have 3 sedans on the driveway. My neighbor - 2. Neighbors on each of our other side - 8 SUVs.
  • Theflyersfan With sedans, especially, I wonder how many of those sales are to rental fleets. With the exception of the Civic and Accord, there are still rows of sedans mixed in with the RAV4s at every airport rental lot. I doubt the breakdown in sales is publicly published, so who knows... GM isn't out of the sedan business - Cadillac exists and I can't believe I'm typing this but they are actually decent - and I think they are making a huge mistake, especially if there's an extended oil price hike (cough...Iran...cough) and people want smaller and hybrids. But if one is only tied to the quarterly shareholder reports and not trends and the big picture, bad decisions like this get made.