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Avilon to pay up to 125 million euros for Volkswagen's Russian activities

Russian authorities have approved a deal under which Russian car dealer Avilon will pay up to 125 million euros (about three billion kronor) for the Russian activities of German carmaker Volkswagen. The Interfax news agency reported this today, citing a source familiar with the relevant decision by a subcommittee of the government's Foreign Investment Control Commission. The commission's approval is needed if Russian activities are sold by companies from countries Moscow considers hostile.

According to Interfax, the bureau's decision concerns the Russian division of Volkswagen Group Rus and its subsidiaries. Russian Industry and Trade Minister Denis Manturov told TASS news agency earlier on Monday that a government commission had approved the sale of Volkswagen's main plant in Russia to Avilon. The factory, which is located in the Russian city of Kaluga and is part of the Volkswagen Group Rus division, also assembled cars made by Czech carmaker Skoda Auto.

Volkswagen Group Rus declined to comment on the value of the transaction. If Volkswagen does indeed receive as much as 125 million euros for its Russian operations, it would contrast with developments at other Western carmakers. The latter have mostly sold their Russian operations for a nominal amount, but reserved the option to buy them back in agreements, Reuters reported.

Volkswagen opened the Kaluga plant, with an annual capacity of 225,000 cars, in 2007, but halted operations last March amid sanctions imposed by Western countries on Russia over its attack on Ukraine.

The Western sanctions dealt a severe blow to the Russian car sector. Total passenger car production in Russia fell 67 percent last year to 450,000 vehicles, the lowest level since the fall of the Soviet Union in 1991.