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Russian Court Orders Volkswagen to Pay $193 Million in Compensation to Local Carmaker GAZ
According to foreign media reports, a Russian court has ordered Volkswagen AG to pay 16.9 billion rubles (approximately $193 million) in compensation to Russian carmaker GAZ Group. GAZ had previously filed a lawsuit against Volkswagen, claiming that Volkswagen’s withdrawal from the Russian market resulted in GAZ incurring losses in profits.In May 2023, Volkswagen completed the sale of its Russian subsidiary and a factory located in the southern part of Moscow to Art-Finance, which is backed by the Avilon car dealership group. The factory was later renamed AGR Automotive. The transaction price was not disclosed, but an insider revealed that the deal was worth 1.25 billion euros (approximately $1.35 billion).
GAZ had signed a contract with Volkswagen to produce Volkswagen cars at its factory in Nizhny Novgorod. In another case, GAZ also asked Volkswagen to compensate for the losses caused by stopping the delivery of engines.
After the escalation of the Russia-Ukraine situation, many Western companies withdrew from Russia, and Volkswagen was one of them. Many foreign automakers sold their assets in Russia at low prices during the hasty withdrawal, leaving the market gaps mainly filled by Chinese automakers.
According to foreign media reports, GAZ Group initially sought compensation of 28.4 billion rubles from Volkswagen, and the Arbitration Court of Nizhny Novgorod partially met the compensation claim.
Volkswagen has stated that it will continue to defend itself in the lawsuit. A spokesperson for the company said in an email statement, “We will study and evaluate the reasons for the judgment to decide on further legal measures.” This means that the judgment in this case has not been finalized. GAZ Group did not immediately respond to a request for comment.
GAZ has also filed other claims, asking Volkswagen to compensate approximately $350 million, saying that Volkswagen’s withdrawal from the Russian market has affected its interests. GAZ had initially persuaded a court to freeze Volkswagen’s assets in Russia pending court proceedings, but subsequent courts ruled not to freeze the assets.
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