Russian court orders Volkswagen to pay $191.5M

A Russian court has ordered Volkswagen to pay 16.9 billion roubles ($193 million) in damages to GAZ Group, a Russian carmaker, following a lawsuit over lost profits after Volkswagen’s exit from the Russian market.

Volkswagen’s market exit

In May 2023, Volkswagen finalized the sale of its local subsidiaries and a plant located south of Moscow to Art-Finance, with support from the auto dealer group Avilon. The factory was subsequently renamed AGR Automotive. While the sale price was not disclosed, sources told Reuters the deal was valued at 125 million euros ($135 million).

Impact on GAZ Group

GAZ Group had a contract to produce Volkswagen vehicles at its Nizhny Novgorod factory. The company also sought damages from Volkswagen over the termination of engine deliveries in a separate case. GAZ initially claimed 28.4 billion roubles in damages, but the Nizhny Novgorod Arbitration Court partially satisfied this claim, as reported by Interfax.

Volkswagen’s response

Volkswagen was among many Western companies that left Russia following the invasion of Ukraine. Many foreign carmakers sold their assets at reduced prices, with Chinese competitors filling the gap.

In response to the ruling, a Volkswagen spokesperson stated, “We will examine and evaluate the reasons for the judgment in order to decide what further legal steps we will take,” emphasizing that the judgment is not yet final. GAZ Group did not immediately respond to requests for comment.

Additional claims by GAZ

GAZ has filed other claims, seeking around another $350 million in damages, arguing that Volkswagen’s exit from the Russian market jeopardized its interests. Although GAZ initially persuaded a court to freeze Volkswagen’s assets in Russia pending the court proceedings, this decision was subsequently reversed.

The lawsuit was filed in April 2023, and Volkswagen continues to defend itself against these claims.