23 May 2023 11:15

Avilon closes acquisition of VW's Russian assets

MOSCOW. May 23 (Interfax) - A subsidiary of Russian auto dealer Avilon, Art-Finance LLC completed the acquisition of German automaker Volkswagen's Russian assets on May 22, data from the Unified State Register of Legal Entities (USRLE) showed.

The price was not disclosed. A market source familiar with the decision of the subcommittee of the government commission for control over foreign investment told Interfax earlier that the sale of the VW assets was approved on April 17 for a price of up to 125 million euros. Therefore, on the day of the deal's approval it was worth almost 11.3 billion rubles, while at the current exchange rate the price is over 10.8 billion rubles.

Art-Finance was registered in Moscow in mid-February. It is wholly owned by Avilon Group president Andrei Pavlovich. The company has wholly acquired VW's Russian division Volkswagen Group Rus LLC, as well as its fully controlled local entities Volkswagen Components & Services LLC, Scania Leasing LLC, Scania Finance LLC and Scania Insurance LLC.

"Our responsibility towards our customers, employees and business partners was in the focus of attention during finalization and approval of the transaction terms. We want to express our highest gratitude to all our customers, employees and business partners in Russia for the outstanding support and loyalty during the years we have been operating in Russia," Volkswagen Group Rus CEO Gerrit Spengler was quoted as saying in a company press release announcing the sale of the VW assets at the end of last week.

The VW plant, located at the Grabtsevo industrial park in Kaluga, has capacity to produce 225,000 vehicles per year. Until early spring of 2022, the plant produced Volkswagen Polo, Volkswagen Tiguan and Skoda Rapid cars. The company also operated a gasoline engine plant in Kaluga with capacity to produce 150,000 engines per year.

Until March 2022, VW also had contract assembly at GAZ facilities in Nizhny Novgorod that produced the Skoda models Octavia, Karoq and Kodiaq and Volkswagen Taos. The contract assembly agreement was terminated in August 2022, with VW paying its Russian partner 4 billion rubles. GAZ said it intended to "ensure alternative utilization" of the freed up plant capacity.

However, in the spring of 2023 GAZ tried to dispute the termination of the agreement and demanded VW pay compensation for losses. The Russian company filed two major lawsuits against VW in Russian court, including one in mid-March with claims of 15.6 billion rubles and another in early April claiming 28.4 billion rubles. In the first, GAZ sought payment for damages it said it suffered as a result of the termination of the agreement with VW. A substantial portion of the claims in the second lawsuit consisted of compensation for lost profits.

GAZ managed to secure a court order to freeze VW's assets in Russia, including the Kaluga plant and equipment, and stakes in Russian subsidiaries and controlled entities. However, subsequent court decisions lifted the freeze as GAZ failed to convince the court that lifting the injunction would make it impossible to collect the damages it sought if it won the case.