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Russian auto boomtown grinds to halt over Ukraine sanctions

Thousands of auto workers have been furloughed and food prices are soaring as Western sanctions pummel the small Russian city of Kaluga and its flagship foreign carmakers, with more sanctions likely to come. The Kaluga region, 190 kilometers (120 miles) southwest of Moscow, says it has attracted more than 1.3 trillion roubles ($15 billion) in investment, mostly foreign, since 2006. But Western sanctions imposed in recent weeks after Russia sent tens of thousands of troops into Ukraine have exacerbated lingering component shortages and halted production at two flagship car plants, Germany's Volkswagen and Sweden's Volvo. A third, the PSMA Rus plant that is a joint venture between Stellantis and Mitsubishi and employs 2,000, may halt production soon due to a lack of parts, Stellantis' chief executive said last Thursday. "It is not clear what will happen. They don't give us any concrete information," said Pavel Terpugov, a welder at the PSMA Rus plant. Terpugov said he needs twice as much money to buy groceries than before the sanctions. Analysts have forecast Russian inflation could soar to 24% this year, while the economy may shrink to 2009 levels. The United States and Europe are weighing more sanctions against Russia after Ukraine accused Russian forces of civilian killings in northern Ukraine, where a mass grave was found in Bucha, outside Kyiv. Russia calls its actions in Ukraine a "special operation" and the Kremlin categorically denied any accusations related to the murder of civilians, including in Bucha. One source of hope for some in Kaluga, with its 325,000 residents, is the West may be reluctant to hurt its own companies. "Does it make sense to impose sanctions on its own plant and lose money?" said Valery Uglov, an auto mechanic at the Volkswagen plant. "Does it make sense to lose the Russian market?" "We hope to return to work as soon as possible and everyone will have confidence in the future again," Uglov said. Volkswagen, whose factory employs 4,200 people, in early March suspended operations. A spokeswoman said production remained frozen. Volvo Group, which employs over 600 people to build trucks, also suspended production. Even before the sanctions, Russian car sales had contracted from 2.8 million units from when the Volkswagen factory opened in 2007 to 1.67 million units last year, damaged by both sanctions after the 2014 annexation of Crimea and the COVID-19 pandemic.

EU formally questions French government assistance of Peugeot's finance arm

Recently, the finance arm of PSA/Peugeot-Citroën was in such debt trouble that it was pricing itself out of the car loan market. The rates it was paying to service its debt, which was rated one step above junk, were so high that it was forced to charge car-buying customers higher rates than they could find elsewhere. This was adding to Peugeot's already impressive woes by sending revenue out the door to competitors.
Two months ago a deal was worked out with the French government whereby the state would provide 7 billion euro ($9 billion USD) in bonds to guarantee the finance arm's loans. The French government could nominate someone to join the Peugeot board, Peugeot would guarantee more French jobs, and on top of that deal, other banks would provide non-guaranteed loans. The government would take no equity stake in the car company.
Although not yet finalized, the arrangement is meant to create some breathing room for Peugeot Finance to lower its interest rates for customers, and a government-nominated board member, Louis Gallois, was recently named to Peugeot's supervisory board. The arrangement was also openly questioned by at least three competitors: Ford, Renault - which is 15-percent owned by the French government after it received state aid - and the German state of Lower Saxony, itself a 15-percent shareholder in Volkswagen.

2022 VW GTI, Golf R and Ford's electric future | Autoblog Podcast #680

In this episode of the Autoblog Podcast, Editor-in-Chief Greg Migliore is joined by Road Test Editor Zac Palmer. They start off discussing their drives in the 2022 VW GTI and 2022 VW Golf R. They then discuss the news, which is jam-packed this week. The Mazda6 and CX-3 are going away, and Alfa is reportedly mulling a new GTV and Duetto. Plus, Ford teased an electric Bronco, confirmed a future electric Explorer and fully revealed the work truck version of the 2022 F-150 Lightning named the "Pro." They end by turning to the mailbag and responding to another listener's Spend My Money question. Autoblog Podcast #680 Get The Podcast iTunes – Subscribe to the Autoblog Podcast in iTunes RSS – Add the Autoblog Podcast feed to your RSS aggregator MP3 – Download the MP3 directly Rundown Cars we're driving 2022 Volkswagen GTI 2022 Volkswagen Golf R News Mazda6 and Mazda CX-3 officially discontinued for 2022 Alfa Romeo's new CEO sees room to bring back the GTV and the Duetto Electric Ford Bronco could be coming, electric Explorer is confirmed F-150 Lightning Pro revealed as Ford's sub-$40K electric work truck Opinion We need to legalize adaptive driving beams already, for safety's sake Mailbag Spend My Money Feedback Email – Podcast@Autoblog.com Review the show on iTunes Autoblog is now live on your smart speakers and voice assistants with the audio Autoblog Daily Digest. Say “Hey Google, play the news from Autoblog” or "Alexa, open Autoblog" to get your favorite car website in audio form every day. A narrator will take you through the biggest stories or break down one of our comprehensive test drives. Related Video: Podcasts Alfa Romeo Ford Mazda Porsche Volkswagen Hatchback Performance