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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.

2015 Volkswagen GTI: Introduction [w/video]

If you've ever met me, listened to me on the podcast, or come to know me through my writing during the last five years at Autoblog, the following phrase should not surprise you: I freaking love the Volkswagen GTI. I've long said that the GTI is the perfect daily driver for the everyday enthusiast – a car that offers as much practicality as it does performance, served up in a semi-premium, attractive package. I've preached the GTI's story to anyone who would listen, and I've managed to convince several people to actually go out and buy one (those folks later telling me they're super happy with their cars, by the way). As for this new, seventh-generation GTI, I'll offer a little backstory. In 2013, Volkswagen flew me to Germany to attend the Frankfurt Motor Show, where I also got to drive a number of the company's products, including the CrossBlue crossover concept. While waiting for my turn to pilot the CrossBlue in an airport hangar, one of the German PR folks directed my attention to a white, four-door GTI sitting outside, and said I was free to have my way with it for, oh, 20 minutes... on an empty runway... in the rain. This was my first experience with the new GTI, in a fairly loaded spec, with all the performance goodies. Needless to say, I loved it. But my other big belief about the GTI is that this car is truly perfect in its base form. The sixth-generation car was a blast without any dynamic controls or performance whats-its, and while those things certainly help make this new hot Golf a more enthusiastic package than ever, in my eyes, they aren't completely necessary. That's why, when it came time to order a long-term car, I took control of the options. The end result is the carbon steel gray GTI you see here, in four-door S (base) spec, with a six-speed manual transmission. Yes, I did outfit our car with the only two options available to S shoppers (aside from the $1,495 performance pack) – the $995 lighting package and $695 driver assistance pack – but other than that, it's a no-nonsense hot hatch. No sunroof. No leather. No fully power-adjustable seats. No navigation. No dual-zone climate control. No automatic headlights. No upgraded audio. The bottom line is that our long-term GTI comes in with an as-tested price of $27,895, including the $820 destination charge. That's right: a $28,000 GTI. What our car does have is everything you'd want in a GTI.

VW still set on Phaeton redux despite cost-cutting drive and losing $32k per car

While critically well regarded, the Volkswagen Phaeton has proven to be a vehicle largely unloved by luxury buyers around the world. Despite this, it refuses to die. While VW's luxury sedan hasn't been sold in the US since 2006 due to low sales here, it has soldiered on in Europe with occasional updates. As the model's long lifespan has been winding down, VW has decided to keep pushing the Phaeton into a new generation, despite in-house alternatives like the Audi A8 and Bentley Continental Flying Spur. The move might not make much business sense, but Volkswagen executives are determined to make the Phaeton work. According to market analysts speaking to Reuters, developing the next-gen luxury sedan on the MLB platform could cost as much as 650 million euros ($737 million), despite relying on the same underpinnings in the A8. It's not like the Phaeton is leading the luxury sedan sales ranks, either. Reuters notes VW produced just 5,812 of them in 2013 (the most current year with data), and from 2002 to 2012, the automaker reportedly lost 28,000 euros ($32,000) on each example sold. Conversely, Mercedes-Benz sold 103,737 units of its new S-Class in 2014, an astonishing 82.2 percent jump over the previous year. The decision to keep the Phaeton going doesn't seem to square with the VW brand's cost-cutting strategy. Boss Martin Winterkorn announced last year a plan to save 5 billion euros ($5.7 billion) annually in the coming years. That plan reportedly also includes killing off less profitable models. Apparently, VW can't just rip off the band-aid and get rid of the Phaeton. Even some VW bosses seem somewhat perplexed at the sedan's business case. When Reuters asked the company's US boss Michael Horn about selling the Phaeton here, he said. "That's a dangerous question. It's an image bearer with no relevance for volume." The next-gen Phaeton is scheduled to go on sale in Europe in 2017 or 2018, according to Reuters, which is about a year later than previous rumors. A US launch will reportedly follow in 2018 or 2019 with the plug-in hybrid and potentially even diesel versions on offer. A starting price around $70,000 is estimated. Featured Gallery 2011 Volkswagen Phaeton View 15 Photos News Source: ReutersImage Credit: Volkswagen Plants/Manufacturing Volkswagen Luxury Sedan vw phaeton cost cutting