Russia’s car industry shudders to a halt as Western sanctions bite

Ilya went to work at the Volkswagen plant straight from university and tried his hand at different roles, from on-site quality control to dealing with post-purchase complaints.

In his ten years at the factory, Ilya got married, got a mortgage and paid it off. He was laid off along with 200 other employees.

“It was a very emotional moment when I came to work to get my papers: a few female colleagues were even crying. The life we had was over,” he said.

Western sanctions have left Russia’s automotive industry in tatters.  New car sales crashed by 82 per cent in June, compared to the same month last year.

At least ten car factories, all of them foreign-owned, have suspended operations in Russia in recent months, devastating the sector and forcing tens of thousand workers on furlough.

More than 7,000 factory workers have been furloughed on two thirds of their salary in  Kaluga, a city 190 kilometres south of Moscow which emerged as a hub for car production during the economic boom.

Several thousand workers at local enterprises that relied on long-term contracts with foreign car makers –  from components production to cleaning services – have also been hit by the suspension in operations.

Dmitry Trudovoi, who lives in Kaluga and leads a trade union for workers at foreign-owned car plants, said, “People went to multinational companies to make money: If you didn’t want to work hard, you could go to a Soviet-legacy enterprise where you could work until lunchtime and then just hang around.”

Many workers are now resorting to low-skilled odd jobs like a security guard or a supermarket clerk to keep the wolf from the door.

In Kaliningrad, local officials said they would hand out free plots of land to furloughed  workers to plant vegetables but Mr Trudovoi dismissed that as a public relations stunt.

A few weeks after the invasion, France’s Renault decided to sell its majority stake in Russian carmaker Avtovaz to a research institute linked to the Kremlin for a token 1 ruble.

In June, Avtovaz unveiled Lada Granta Classic 2022, a new “sanction-proof” Lada, designed to use components only from Russia and its allies.

It will have no airbags or anti-emissions technology and would only pass European pollution rules dating back to 1996. 

Read More: Russia’s car industry shudders to a halt as Western sanctions bite

2022-08-13 07:23:00

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