FAQs – Ukraine

Does Russia’s invasion of Ukraine change anything regarding your business? Are any plans being reassessed? Might you scale back your activities?
In view of the Russian attack on Ukraine and the consequences of this, the Group Board of Management of Volkswagen AG has decided to halt the production of vehicles in Russia until further notice with immediate effect. This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod. Likewise, vehicle exports to Russia will be stopped with immediate effect.

Does ŠKODA AUTO still have responsibility for the Russian and Ukrainian markets?
Yes. As of 2022, ŠKODA is fully responsible for the management and financial governance of the Russian region.

How many cars will not be produced this year due to the closure of Russian production plants?
The Russian market is one of ŠKODA’s most important markets globally. In 2021, Russia was the brand’s second-largest market; a total of 90,400 ŠKODA vehicles were delivered to customers there. At this time, it is impossible to determine the exact number of vehicles that will not be produced in 2022.

How will the war in Ukraine affect your sales results this year? 
We are monitoring the situation, and it is not possible to estimate the impact on sales results at the moment.

Where do Russia and Ukraine rank among your export markets?
The Russian market is one of ŠKODA’s most important markets globally. In 2021, Russia was the second-largest market overall. A total of 90,400 ŠKODA vehicles were delivered there. Ukraine has also been a stable market, with sales of around 6,000 ŠKODA vehicles a year. Since 2002, approximately 190,000 ŠKODAs have been produced at the plant in Ukraine.

How big was the Russian market for you?
The Russian market is one of ŠKODA’s most important markets globally. In 2021, Russia was the brand’s second-largest market; a total of 90,400 ŠKODA vehicles were delivered to customers there.

Will ŠKODA be exporting cars to Russia?
In view of the Russian attack on Ukraine and the consequences of it, the Volkswagen Group’s Board of Management has decided to stop exporting cars to Russia with immediate effect. We continue to monitor the situation at the level of ŠKODA AUTO and the Volkswagen Group. We will not be making any further comments on the future strategy for the Russian market at this time.

Are you currently supplying cars to dealerships in Russia?
Deliveries of vehicles manufactured directly in Russia to Volkswagen Group RUS dealerships were suspended until the decision of Group Volkswagen to stop the manufacturing activities in Russia. The remaining cars on stock between the dealer and customer will be delivered.

Is Volkswagen leaving Russia entirely?
In view of the Russian attack on Ukraine and the consequences of it, the Volkswagen Group’s Board of Management has decided to suspend vehicle production in Russia until further notice with immediate effect. This decision applies to the Russian production plants in Kaluga and Nizhny Novgorod.

We are also halting vehicle exports to Russia with immediate effect.

By suspending business activities in Russia, the Volkswagen Group’s Board of Management is responding to the overall situation, which is characterised by considerable uncertainty and disruption.

We continue to monitor the situation at the level of ŠKODA AUTO and the Volkswagen Group. We will not be making any further comments on the future strategy for the Russian market at this time.

Do you ever plan on resuming production activities in Russia?
In view of the Russian attack on Ukraine and the consequences of it, the Volkswagen Group’s Board of Management has decided to suspend vehicle production in Russia until further notice with immediate effect. This decision applies to the Russian production plants in Kaluga and Nizhny Novgorod.

We are also halting vehicle exports to Russia with immediate effect.

By suspending business activities in Russia, the Volkswagen Group’s Board of Management is responding to the overall situation, which is characterised by considerable uncertainty and disruption.

We continue to monitor the situation at the level of ŠKODA AUTO and the Volkswagen Group. We will not be making any further comments on the future strategy for the Russian market at this time.

What will leaving the Russian market mean for you in terms of financial losses?
At this time, it is impossible to determine exactly what impact this will have on ŠKODA AUTO’s financial performance. The issue is being addressed at the level of ŠKODA AUTO and the Volkswagen Group.

Will you be relocating production from Russia to another site and where would that be? Do you have free capacity for this?
At the moment, it is too early to predict how the production programme will be replaced. We continue to monitor the situation at the level of ŠKODA AUTO and the Volkswagen Group. We will not be making any further comments on the future strategy for the Russian market at this time.

2.1. Production in Ukraine and Russia

What vehicles and how many do you produce at the Ukrainian plant in Solomonovo? Is production still running there?
We produce cars from SKD format in Ukraine, namely the SUPERB, KODIAQ, KAROQ and FABIA COMBI. Production in Ukraine is handled by our business partner Eurocar. Production of ŠKODA vehicles is currently suspended at the Solomonovo plant.

What models do you produce in Ukraine?
Cars are produced in Ukraine from SKD format, namely the SUPERB, KODIAQ, KAROQ and FABIA COMBI models for the local market. Production in Ukraine is handled by our business partner Eurocar. Production in Ukraine at the Solomonovo plant is currently suspended.

What markets are ŠKODA cars made in Ukraine destined for?
Cars produced at the Solomonovo plant are intended for customers in the Ukrainian market only.

Were cars produced there shipped to Germany/Western Europe?
The cars produced at the Solomonovo plant are intended only for customers in the Ukrainian market.

What ŠKODA models are manufactured in Russia? Is production currently underway in Nizhny Novgorod and Kaluga?
In Russia, we produce the RAPID, OCTAVIA, KAROQ and KODIAQ. In Nizhny Novgorod, we produce three models – the OCTAVIA, KAROQ and KODIAQ. The RAPID is produced at our Kaluga plant.

Which ŠKODA cars are made in Russia?
In Russia, we produce the RAPID, OCTAVIA, KAROQ and KODIAQ. In Nizhny Novgorod, we produce three models – the OCTAVIA, KAROQ and KODIAQ. The RAPID is produced at our Kaluga plant.

In view of the Russian attack on Ukraine and the consequences of this, the Group Board of Management of Volkswagen AG has decided to halt the production of vehicles in Russia until further notice with immediate effect. This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod.

What will now happen to the Kaluga plant, which is owned by the Volkswagen Group? What purpose will it serve?
At this time, it is too early to predict future developments. The topic is being addressed at the level of ŠKODA AUTO and the Volkswagen Group

Have any Volkswagen Group cars been produced in Russia and exported to other markets?
Cars produced at Russian Volkswagen Group plants are also intended for export to CIS countries (Belarus, Azerbaijan, Kazakhstan, Armenia, Tajikistan, Uzbekistan).

In view of the Russian attack on Ukraine and the consequences of this, the Group Board of Management of Volkswagen AG has decided to halt the production of vehicles in Russia until further notice with immediate effect. This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod.

2.2. Employees in Ukraine and Russia

How many people do you employ in Russia and Ukraine?
Vehicle production in Ukraine is handled by our business partner Eurocar and its local employees. No ŠKODA AUTO employees are assigned there. In Russia, there is currently one employee together with his family on assignment. In Russia, there is currently one employee together with his family on assignment.

What is the employees’ situation at the factory in Ukraine, and how long will production be suspended? What is the status of production at the plants in Russia?
Production at Solomonovo in Ukraine, which is handled by our business partner Eurocar, is currently suspended due to the current situation.

In view of the Russian attack on Ukraine and the consequences of this, the Group Board of Management of Volkswagen AG has decided to halt the production of vehicles in Russia until further notice with immediate effect. This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod.

What is going to happen to your staff deployed in Russia now?
The safety of our employees is our number one priority. That is why we are organising the return of employees deployed in Russia back to the Czech Republic. Most of them have already returned. We continue to monitor the situation closely and remain in close contact with all of them. All employees will be reintegrated into our core staff.

Do you deal with the safety of employees at production sites in Russia? Are you calling employees back to the Czech Republic?
Employee safety is a top priority for us. This is why we have decided to organise a return to home country for our employees in Russia. Most of them have arrived already. We continue to monitor the situation closely; we remain in close contact with all employees. Current scenarios are being addressed at the management level of ŠKODA AUTO and the Volkswagen Group.

What is going to happen to your Russian employees at the Russian plants in Kaluga, Nizhny Novgorod and Moscow?
Intensive negotiations, which also involve the trade unions, are currently underway at the Group level. At the same time, the Volkswagen Group’s Board of Management takes its responsibility for the affected employees of Volkswagen Group RUS very seriously. These employees in Russia will receive appropriate wage compensation, the cost of which will be covered by the Volkswagen Group.

2.3. Suppliers in Ukraine and Russia

How many suppliers do you have in Ukraine in total?
The number of suppliers is relatively small, namely three direct suppliers and two other suppliers supplying just-in-sequence (‘JIS’). In addition, ŠKODA AUTO has another five subcontractors there. The supply chain is being assessed with the aim of defining additional subcontractors so that further risks to the supply can be eliminated.

What about suppliers in Ukraine and Russia? Are you suspending cooperation with Russian suppliers as well? Where will you source the missing parts from?
We are working closely with our Ukrainian partners to find ways to secure production at our suppliers’ sites, while keeping the employees as safe as possible. We are maintaining our business relationship with our Ukraine suppliers.

In Russia, some Western suppliers were producing for us in small amounts. The supply chain is being assessed to identify alternative suppliers so that further risks to supply can be eliminated.

In Russia, it seems that many cars are produced locally for the local market. Are supplier parts also produced locally?
Parts are produced locally. This is following our global strategy to produce local for local on higher percentage.

In view of the Russian attack on Ukraine and the consequences of this, the Group Board of Management of Volkswagen AG has decided to halt the production of vehicles in Russia until further notice with immediate effect. This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod. Likewise, vehicle exports to Russia will be stopped with immediate effect.

How does the situation affect the supply of parts to other ŠKODA AUTO plants in Europe? What is ŠKODA AUTO doing to secure the sources of material and components that are either produced in or pass through Ukraine?
ŠKODA AUTO is trying to proceed with the maximum respect for the situation in Ukraine, and we are looking into alternative supply options or alternative routes. We are monitoring the situation of the supply sector in Ukraine very closely. With our customers in mind, we strive to find the most suitable alternatives for the production of our cars.

To what extent do existing or new sanctions affect Volkswagen's cooperation with the contractor manufacturer in the plant in Nizhny Novgorod?
Against the background of the Russian attack on Ukraine and the resulting consequences, the Group Board of Management of Volkswagen AG has decided to stop the production of vehicles in Russia until further notice. This decision applies to the Russian production sites in Kaluga and Nizhny Novgorod.

Vehicle exports to Russia will also be stopped with immediate effect.

With the extensive interruption of business activities in Russia, the Executive Board is drawing reviewing the consequences from the overall situation, which is characterised by during this period of great uncertainty and the current upheavals.

Volkswagen Group RUS has operated a contract manufacturing facility at GAZ in Nizhny Novgorod since 2011. GAZ and majority owner Oleg Deripaska have been on the US sanctions list since April 2018. Since then, the continuation of production at GAZ has been subject to a General License (GL) issued by the competent US authority OFAC. The general licence was extended for 90 days at the end of January 2022. 

3.1. Car production in the Czech Republic

Are you facing supply shortages due to the situation in Ukraine? If so, are these the only suppliers for Europe and Russia and do you have no alternative?
The Volkswagen Group's global supplier network, which comprises more than 40,000 suppliers, also includes a number of suppliers in western Ukraine. Due to the current situation in this region, there may be disruptions in the supply chain. This can lead to adjustments in production at individual Group locations. VW Group and ŠKODA founded for handling this dedicated Taskforce team.

What is the current situation in production?
As a result of disruptions in supplies from Ukraine, we stopped production of the ENYAQ iV. Our experts are working hard to find viable alternatives so that deliveries can resume. For other models, short-term supply disruptions may lead to incomplete cars being produced or production interruptions, but so far logistics has managed to minimise this risk.

Are other models besides the ENYAQ iV at risk?
Production of the SCALA and KAMIQ models are also at risk due to the unavailability of wiring harnesses.

Will you be producing ENYAQ iVs as unfinished vehicles and parking them until parts become available, or will you be reducing the production rate?
It is not feasible to produce incomplete vehicles in this case due to the nature of the missing parts. We are addressing the situation by adjusting our production programme and completing pre-produced cars that are missing the parts we now have sufficient quantities of.

3.2. Sales

As already announced, you will be stopping or reducing production. What will happen to customers’ orders? 
ŠKODA AUTO’s team of specialists is working hard to secure the supply of missing parts. We will process customers’ orders according to the availability of parts.

How will this affect the availability of models?
We are reviewing and monitoring the situation to ascertain how the availability of specific models will be affected.

Are any models and powertrain configurations being prioritised in production?
We are managing our production based on the availability of parts and the queue position of the order.

Will the availability of vehicles be the same in all markets or will it vary?
We will be processing orders for cars according to the supply of parts.

On what basis, if any, are quotas for allocating cars to the various regions determined?
We produce cars on a first-come, first-served basis and according to the availability of parts.

Which model will now have the shortest and, conversely, the longest waiting time? And how long will the waiting times be?
We are reviewing and continuing to monitor the situation and its impact on waiting times, which have already been affected by the global crisis stemming from the semiconductor shortage.

What effect will inflation have on ŠKODA’s prices?
Along with the automotive sector and other manufacturers, ŠKODA AUTO is facing the most significant rise in inflation in several years.

We are experiencing several inflationary pressures, caused not only by the Volkswagen Group’s decision to halt production in and exports to Russia as a result of its attacks on Ukraine but also due to a critical shortage of parts from several Ukrainian suppliers, which is affecting the production of some ŠKODA models. This is why, for example, we have been forced to suspend production of the ENYAQ iV electric car as of 3 March 2022.

In addition, input and energy prices have increased. All of this has led to a rise in corporate costs, and therefore, we cannot rule out the possibility of our car prices increasing in the future. However, we are taking all possible countermeasures to minimize the impact of these developments, including hedging transactions and negotiating long-term contracts with our suppliers. At the same time, we are responding with increased cost discipline and the introduction of an extensive combined efficiency improvement programme. While these measures will reduce the impact of price increases on our operations, unfortunately, they cannot fully offset them.

Will the situation in 2022 be even worse than in 2021?
Despite all the challenges, 2021 was a good year for ŠKODA AUTO. During the semiconductor supply crisis, which was particularly critical in the third quarter of last year, we took every step to produce as many cars as possible. That is also why we ultimately managed to deliver a total of 878,200 vehicles to customers worldwide. The all-electric ENYAQ iV successfully entered the market with almost 45,000 vehicles being delivered. Thanks to the new KUSHAQ, ŠKODA AUTO also grew significantly in India.

2022 will be no less challenging for ŠKODA AUTO. The ongoing shortage of semiconductors, coupled with the termination of production in Russia, the shortage of parts for the production of ŠKODA models supplied from war-torn Ukraine, supply chain issues, as well as the continuing uncertainty on the global markets and the rising prices of energy, raw materials and other inputs, will continue to weigh heavily on 2022. However, we still enjoy strong customer demand. Moreover, we believe that with its NEXT LEVEL – ŠKODA STRATEGY 2030, the automaker is well-positioned over the long term to emerge stronger from the transformation process despite this extremely challenging situation.

3.3. Employees in the Czech Republic

How many Russian and Ukrainian employees do you have at your Czech plants?
We have 615 Ukrainian and several dozen Russian colleagues working at our plants.

Are Ukrainian employees planning to return to their country to fight?
We do not have any information on this.

What is your approach to the possibility of ‘Kurzarbeit’?
ŠKODA AUTO would welcome the possibility of a long-term instrument such as the German ‘Kurzarbeit’ system (‘short-time work’) to help employers overcome potential economic difficulties and to ensure flexibility in the labour market in similar situations.

Is ŠKODA AUTO recruiting (or planning to recruit) interested immigrant workers? Did you notice that there is an interest in this area? 
We are monitoring the development of the labour market following the arrival of Ukrainian refugees, but at the moment, it is too early to make any predictions about how the current situation will develop.

Are you planning to lay off employees?
The current conflict in Ukraine is also impacting ŠKODA AUTO’s production. We are working with the KOVO trade union to handle the impact of this conflict on our employees as effectively as possible.

3.4. Suppliers

How long will your supply of critical parts for Europe last?
For Europe, stock levels range from 6 to 25 working days, depending on the specific part, and we are working hard to secure additional supplies or potentially use immediately available alternatives.

Is the shortage of the supply of raw materials from Russia already having any impact? How much more expensive are these raw materials becoming?
Neither a risk in the supply of raw materials, nor an increase in the price of raw materials can be ruled out at present. We are currently monitoring the commodity markets, rouble fluctuations and the impact of the banking entities being removed from the SWIFT system in order to ensure the smooth supply of material to production.

3.5. Volkswagen Group RUS

How many employees does Volkswagen have in Russia?
Nearly 4,000 Volkswagen Group RUS employees work at the Kaluga plant in Russia. In Nizhny Novgorod and Moscow, there are more than 200 and nearly 600 Volkswagen Group RUS employees, respectively.

What cars of the other Group brands are produced in Russia?
The Volkswagen Tiguan and Polo are also produced in Kaluga.
The Volkswagen Taos is also produced in Nizhny Novgorod.

Vehicle deliveries to customers in Russia in 2021

Further information about Volkswagen Group RUS can be found here.
Further information about the Kaluga plant can be found here.
Further information about the Nizhny Novgorod production plant can be found here.
 

Do you plan to help the families of these employees following Russia’s invasion of Ukraine?
The Volkswagen Group, including all its brands, has decided to donate one million euros to the UN Refugee Aid Agency. ŠKODA AUTO is also contributing to this donation.
In addition to this support, the company is pursuing other humanitarian efforts in collaboration with its social partner, the KOVO trade union.

Financial aid

● ŠKODA AUTO is donating CZK 10 million to the Czech non-profit NGO ‘People in Need’ (‘Člověk v tísni’).

● The town of Mladá Boleslav is organising a fundraiser for the hospital in the Ukrainian partner town of Tiačiv, to which ŠKODA AUTO will be contributing CZK 1 million. The KOVO MB Trade Union is also supporting this collection with CZK 1 million.

● The latest contribution is an employee collection organised in collaboration with the KOVO Trade Union. The company’s management doubled this amount to a total of CZK 3.6 million. In response to the critical situation in Ukraine, the carmaker has already released more than CZK 20 million.

● We are keeping our employees informed about material or financial collections organised by our partner towns. More information can be found here:

- Fundraising in Mladá Boleslav
- Material collection in Mladá Boleslav
- Material collection in Rychnov nad Kněžnou

Accommodation

We appreciate the fact that our partner towns of Mladá Boleslav, Rychnov nad Kněžnou and Vrchlabí are preparing to receive Ukrainian refugees. To cover their additional costs, ŠKODA AUTO will be donating CZK 1 million to Mladá Boleslav and half a million to Rychnov nad Kněžnou and Vrchlabí.

● The carmaker is also offering long-term accommodation to our employees’ families in the regions where it operates, for example, at the ŠKODA AUTO Hotýlek accommodation facility.

● The refugees will also be offered accommodation at the recreational facilities owned by the KOVO MB Trade Union or places at children’s camps for refugee children. At the same time, there will be activities to support local municipalities in Rychnov nad Kněžnou and Vrchlabí in collaboration with the KOVO KV Trade Union and KOVO VR Trade Union.

● We are offering support with visa applications, accommodation, language courses, health care, integration and education. In addition to the activities already mentioned, we have opened a contact line for our employees.

Material aid

● Since our core business is mobility, ŠKODA Logistics will be involved in transporting donated items and will be providing vehicles to support Czech humanitarian organisations in their work.

● We are also helping directly in Ukraine in Solomonov, where we assisted in building a refugee centre. With the help of ŠKODA Logistics, we have already transported twelve trucks of humanitarian aid to Ukraine.

● An example of an immediate response to the needs of refugee families is the support for the learning centre in Mladá Boleslav. From conception to implementation in just three days, the learning centre has been available since the beginning of March to help children and adults with integration and language courses. Such has been the interest in the learning centre that within two weeks, the capacity has grown to 600 children and adults who already have access to 23 classrooms across the town. ŠKODA AUTO has contributed financially to establishing and running the centre and expects to continue to do so.

What impact does Volkswagen believe a lengthy conflict will have on the European economy?
The Volkswagen Group fears that the conflict between Ukraine and Russia will have a serious impact on the whole European economy.

A further, long-term interruption to global supply chains could result in, among other things, considerable price increases, an energy shortage and an increase in inflation and thus have massive negative effects for European companies.

Europe is dependent on imports of raw materials and so there might be long-term bottlenecks that would additionally hit the European economy. Sanctions and counter-sanctions impact Russia and Europe. The USA and China remain largely unaffected.

That is why the Volkswagen Group advocates a united, strong stance by the international community.

Volkswagen is fully implementing the sanctions that have been imposed.

The objective must be to achieve an end to the armed conflict in Ukraine, and in particular stop the suffering of the people in Ukraine, as soon as possible by means of negotiations between the parties on an equal footing.

How are you going to respond to the Russian government’s threat to nationalise the Volkswagen Group’s plant and assets in Russia and place them under external administration? 
The Volkswagen Group is concerned about the discussions on expropriation. Volkswagen is suspending the production of vehicles in Russia and the export of vehicles to Russia until further notice.

Our employees in Russia continue to be employed and, while business is suspended, will continue to receive remuneration, which is borne in full by VGR. We also continue to supply spare parts and fulfil our servicing, warranty and payment obligations. Like other companies in the region, we are also faced with an extraordinary situation: a lack of or severely limited availability of parts from suppliers, as well as logistical challenges resulting from the acts of war.

Do you fear that your support for the sanctions the EU has imposed on Russia will affect your relationship with China?
The Group does not see any effect of the conflict in Ukraine on its business activities in China. 

Does the removal of Russian banks from the SWIFT system mean that Volkswagen is suffering or expects difficulties relating to payment of deliveries and raw materials from Russia or invoicing of new vehicles by importers/dealers?
We assume that there may be more severe restrictions in payment transactions with Russian importers and Russian suppliers when removal of Russian banks from the international payment system SWIFT comes into effect.

What do you say to the talks between representatives from the Russian government and the automotive manufacturers operating in Russia on March 11?
Volkswagen’s Group Board of Management has decided to stop producing vehicles in Russia until further notice. The export of vehicles to Russia has likewise been halted.

It is not possible to predict at present what the long-term impact on our business in Russia will be.

We will continue to monitor the latest developments very closely.

What action has the Volkswagen Group taken to cushion the loss of deliveries from Ukraine?
As soon as the war broke out, the Group Board of Management established a crisis team that analyzes the impact on our work on a daily basis. The task force has already reduced production stoppages and secured production. Nevertheless, there will be further production stoppages.

The “Ukraine Supply Task Force” did a great job in its very first week:

● 10 top suppliers sent 80 employees to Wolfsburg to work on solutions together with our procurement teams (>100 Volkswagen employees).
● Other locations in Eastern Europe, North Africa and also overseas are already stepping into the breach at short notice to compensate for the losses.
● What we have built up over the past months with the Group’s procurement strategy NORTH STAR is paying off in this crisis: genuine partnership between suppliers and the Group. Aided by this strategic approach based on trust and cooperation, Group Procurement will also overcome the current crisis.

Why doesn’t Volkswagen have a “Plan B” and has prepared for the loss of a specific supplier by engaging alternative suppliers?
It must first be noted that nobody expected an attack on Ukraine.

In general, there has again been a stronger focus on the issue of double sourcing in the wake of the supply bottlenecks for semiconductors, and our supply chains are already being examined in that context.

Group Procurement is already working intensely to establish and secure alternative production sources together with relevant suppliers. A new task force has been set up to enable that and has already launched initial steps successfully.

What is the personnel situation like at your Russian plant?
In all activities on site, the safety and well-being of our employees has top priority. The degree to which our business activities are impacted in the affected countries is continuously ascertained by a crisis team.

Given that some European governments (such as the Czech Republic) have advised their citizens to leave Russia, foreign employees currently working in Russia and wishing to leave the country will be given support to do so and the company will ensure they are provided with ways of leaving. The Group Board of Management takes its responsibility towards the affected employees at Volkswagen Group Rus very seriously. The affected employees will continue to be paid a reasonable portion of their wages and the costs of that will be borne by Volkswagen.

Is the Volkswagen Group ready for bottlenecks in the supply of precious metals which are needed in particular to make electric vehicles?
The Volkswagen Group is continuously monitoring the situation as regards capacities and requirements for important raw materials and supplied parts. Long-term measures to secure them are being implemented together with the suppliers.

There is also an extensive and proactive program for procuring and securing the supply of important precious metals, and it will likewise be effective in the current crisis situation.