Toyota closes auto plant in Russia, retains after-sales service - Industry and Trade Ministry

MOSCOW. Sept 23 (Interfax) - Toyota Motor LLC, the Russian division of Toyota Motor Corporation, is completely shutting down car manufacturing at its plant in St. Petersburg, though it will retain after-sales service, the press service of Russia's Industry and Trade Ministry has told Interfax.

"Toyota Motor is shutting down the assembly site in St. Petersburg. Meantime, it will ensure the fulfillment of all social obligations to the team, as well as significant additional compensatory payments," the ministry said.

Additionally, Toyota Motor LLC is retaining after-sales service for Toyota and Lexus cars and support for the dealership network, the ministry said.

"Russia's Industry and Trade Ministry, jointly with the St. Petersburg government, is working on possible scenarios for developing the site," the ministry added.

The Kommersant publication previously reported that Toyota's decision to shutter local manufacturing was because of the impossibility of resuming the rhythmic supply of components.

A source close to the authorities in St. Petersburg told the publication that they and the company would consider selling the asset that will be mothballed. Meantime, the manufacturing of Toyota cars would not resume at the site, another Kommersant source noted.

The operations of the Moscow office are also expected to be optimized. Kommersant noted that, "the company wants to part 'on good terms' with the employees of both the plant and the office, who would be offered increased payments," meaning severance pay totaling 12 monthly salaries.

As previously reported, Toyota in early March suspended supplies to Russia and manufacturing at the auto plant in St. Petersburg. The company also reported that it had no plans to close the plant and exit the Russian market.

The Russian representative office of Toyota, Toyota Motor LLC, was registered in 2001. The company's branch is the Toyota plant in St. Petersburg, with the capacity to manufacture 100,000 vehicles per year. The enterprise launched operations at the end of 2007, manufacturing the RAV4 and Camry models under a special investment contract signed with Russian's Industry and Trade Ministry. Investments on the part of Toyota under the contract have reportedly totaled 20 billion rubles.