20 Oct 2009 17:47

Volkswagen launches full assembly at Kaluga plant

KALUGA. Oct 20 (Interfax) - Volkswagen AG launched full assembly at its plant in Kaluga, central Russia, on Tuesday, an Interfax correspondent reported from the ceremony, which was attended by Russian Prime Minister Vladimir Putin and VW's board chairman, Martin Winterkorn.

The German car giant has invested EUR 570 million in building the plant and EUR 774 million in the project as a whole. The plant intends to produce ten VW and ten Skoda models.

The SKD shop at the Kaluga site already produces the Skoda Octavia, Octavia Combi, Octavia Tour, Octavia RS, Octavia Scout, Skoda Superb, Skoda Roomster, Skoda Fabia, Skoda Fabia Combi, Skoda Yeti, Volkswagen Passat, Volkswagen Passat CC, Volkswagen Tiguan, Volkswagen Golf, Volkswagen Touareg, Volkswagen Jetta, Volkswagen T5, Volkswagen T5 Lang and Volkswagen Caddy.

The plant should be producing 150,000 cars per year in 2010. It currently has 1,800 employees, and plans to increase its head count to 3,000 in 2010.

Work on the Kaluga plant started on October 28, 2006. The first cars rolled off the assembly line on November 30, 2007.

The plant has only screwdrivered cars together until now. Its first models were the VW Tiguan and Skoda Octavia.

Vladimir Putin said at the ceremony that he thought Russian automobile producers would cope with the problems they are experiencing due to plummeting demand for cars.

"We'll be offering every kind of support to traditional [Russian] car makers. They play an enormous role in our economy, providing jobs in dozens of cities and whole regions, and I have no doubt they will cope with today's problems, modernize their factories and produce competitive vehicles that will be in demand," Putin said.

Regarding the VW plant, Putin said: "It's always good to see all the effort, labor and initiative that has been put in yield real, tangible results. I think the residents of Kaluga and our German partners from Volkswagen have every reason to be proud. Kaluga's example shows just how you can create industrial centers from next to nothing, attract state-of-the-art technology and create new, well paid jobs."

"Today's event is another sign of investor confidence. I'm sure they've not miscalculated. The Russian automobile market clearly has good prospects. Objectively speaking, it's the biggest in Europe. Many of the world's leading concerns are working here, and we view the plants they are opening as an integral part of the Russian automobile industry," Putin said.

"And this is a good car, I like it," Putin said, after taking a close look at a Tiguan SUV.

VW's Martin Winterkorn said the Russian automobile market could grow 30% to 3.6 million vehicles by 2018.

In the medium-term outlook, the Russian market will quickly grow into one of the top five "automotive powers," he said.

Analysts have cut their forecasts for car sales in Russia a number of times this year. Autostat now forecasts that 1.55 million cars will be sold this year under its optimistic scenario. Under that scenario, growth would resume in the spring of 2010, with sales rising to 1.75 million cars in 2010, 2 million in 2011 and 2.4 million in 2012.

Under the pessimistic scenario, car sales would fall to 1.35 million units in 2009 and to 1.2 million in 2010 and 2011, and only begin rising, to 1.4 million units, in 2012.

Consumer demand is declining as real incomes fall. Meanwhile, all the new cars sold during the consumption boom in 2005-2008 are entering the secondary market, where they represent an affordable alternative to the new car market.

A total of 2.81 million cars were sold on the Russian market in 2008, according to Autostat data.