Volkswagen and GAZ Group agreed to produce cars jointly at GAZ facilities in Nizhny Novgorod, the companies said Thursday in a joint statement.
The carmakers signed a memorandum of understanding, under which the joint venture will produce more than 100,000 Volkswagen and Skoda cars a year. Production will entail increased utilization of GAZ facilities and Volkswagen providing additional equipment.
"Cooperation with GAZ gives us a unique opportunity to expand our production capacity in a fast way," said Marcus Osegowitsch, chief executive of Volkswagen Group Rus. VW will also expand production at its Kaluga facility, which now makes only Volkswagen Polo sedans, and start manufacturing new models. The companies plan to sign a final agreement later this year.