Proposal to rebuild Russian car industry unearthed

AN AUSTRIAN Porsche SE supervisory board member has allegedly sent a letter to Vladimir Putin offering a deal to rebuild the country’s beleaguered car manufacturing industry in defiance of sanctions from broader Europe and many other countries, including Australia.

Russia’s invasion of the Ukraine last year prompted condemnation that snowballed into recriminations followed by staunch economic sanctions.

The automotive industry was at the forefront of these sanctions with many manufacturers pulling out of delivering new cars to Russia and withdrawing from Russian car manufacturing operations, some within weeks while others were somewhat tardier.

The Volkswagen Group including Porsche was among the early withdrawals acting in March last year and saying at the time, “the Volkswagen Group has reacted to the news about the war in Ukraine with great dismay and shock”.

For its part, Porsche said it “continues to hope for a cessation of hostilities and a return to diplomacy and is convinced that a sustainable solution to the conflict can only be found under the auspices of international law”.

“In everything that Porsche does, the safety and wellbeing of people is paramount. The degree of impact on business activities is continuously being determined by a task force of experts.

“Due to the current situation, Porsche has stopped the delivery of its vehicles to Russia with immediate effect. With the extensive interruption of its business activities in Russia, Porsche is basing its decisions on the overall situation, which is characterised by great uncertainty and the current upheavals.”

However, news has come to light in Germany’s Der Spiegel newspaper that Porsche SE supervisory board member and entrepreneur, Siegfried Wolf, has allegedly tried to strike a deal with the head of the Kremlin to rebuild Russia’s car making industry using Skoda models.

In his Russian representations, Mr Wolf has also allegedly offered to facilitate the deal in a letter to Vladimir Putin.

Mr Wolf allegedly proposed to Putin that the new Russian Volga cars be based on Skoda models.

According to a three-page letter obtained by Der Spiegel, Mr Wolf proposed a plan to use Volkswagen plants that the company is trying to divest itself from to resurrect the Russian Volga car brand.

Der Spiegel says: “In the letter that dates back to January, (Mr) Wolf suggested that the new Volga vehicles would be based on Skoda models, but ‘completely redesigned externally’ to incorporate classic Volga design features”.

Contents of the letter purportedly recommended the rebuilding program would require a substantial RUB60 billion ($A1.1b) investment from Russia.

The program would aim to produce some 270,000 vehicles per year and would “revitalise the beleaguered Russian automotive industry”, which has struggled under international sanctions.

Der Spiegel says in its report, “(Mr) Wolf’s project promised to create or preserve 12,000 jobs and that (Mr) Putin reportedly expressed support for the plan”. The project’s operator would be PromAvtoKonsalt, a Russian company that Der Spiegel says is owned by Mr Wolf himself.

Worryingly, Mr Wolf has claimed he had the imprimatur and “fundamental agreement with the top management of Volkswagen” concerning the proposed deal. But his claim has been refuted by other members of the Volkswagen board of directors who say they had “no knowledge whatsoever” of the letter or “its irritating contents”.

Volkswagen is embroiled in various legal issues with Russian companies relating to breach of contract that have resulted in some of Volkswagen’s Russian assets being frozen.

Pouring petrol on the flames, Der Spiegel also reports that there have been allegations of collaboration between Schaeffler, an automotive supplier on whose board Mr Wolf also sits, and Russian automotive manufacturer GAZ since March to prepare for automobile production.

Der Spiegel says Schaeffler has denied these claims.