The Volkswagen Group (IW 1000/10) announced on Tuesday that it will construct an engine plant in Kaluga, Russia.
VW will invest 250 million euro (US$314 million) at the new location, where the modern engine generation EA211 will be produced locally as of 2015.
The capacity is set at 150,000 engines a year. The engine plant is being built directly next to the Volkswagen vehicle plant in Kaluga.
"Russia is the primary strategic growth market in Europe for the Volkswagen Group,” said Dr. Martin Winterkorn, chairman of the Board of Management of Volkswagen Aktiengesellschaft.
“By 2018 we intend to sell a half a million vehicles here annually,” he added. “ To this end we will once again be investing approximately 1 billion euro in local production and new models."
The engine that will be produced in Kaluga in the future is a 1.6 liter petrol engine from the EA 211 series.
As of 2015, the engine plant will supply engines for the vehicle production of the Volkswagen Group Rus in Kaluga as well as the contract production in the GAZ plant in Nizhny Novgorod. Crankcases, cylinder heads with assembly integrated, crankshafts as well as the complete engine assembly are all part of the planned scope of production.
With the construction of the engine plant, Volkswagen is expanding its industrial commitment in Russia. At the same time, the Group is fulfilling the targets agreed with the Russian government at the end of May 2011 in the ancillary agreement to decree 166 which determines that, as of 2016, at least 30% of vehicles produced in Russia will be equipped with engines that were manufactured locally.
Investments by the Volkswagen Group in Russia up to now have totalled approximately one billion euro.
In order to respond to the strong increase in demand on the Russian automotive market in the future, VW is planning to invest a further one billion euro in Russia for the development of new market-driven products, the further localisation of production as well as the construction of the new engine plant in Kaluga as was agreed today.