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Business

VW CEO talks business with Russia's Putin

To reverse Volkswagen's flagging fortunes on the Russian market, the German carmaker's CEO Matthias Müller has met with President Vladimir Putin to reportedly seek special privileges for his company.

Following talks between Putin and Müller, the Russian leader said he was ready to help the German automotive behemoth's efforts to arrest sliding sales and reinvigorate its business in the country.

"We are very happy that your business as a whole is doing well, although we understand there are certain difficulties," Putin said after the meeting, a rare face-to-face between the Russian leader and a major European industrialist after the West sanctioned Moscow for its 2014 annexation of Ukraine's Crimea.

"We are always ready to discuss any questions you have to help you develop further in our country."

The meeting between Müller and Putin in Moscow comes at a critical time for VW, whose sales in Russia have seen a sharp downturn in recent years, plunging from their 2012 peak of almost 3 million vehicles a year to around 1.4 million cars now.

Still, VW Group, which includes a range of brands such as Volkswagen, Audi and Skoda, is Russia's biggest foreign automaker by sales and revenue.

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Whereas several foreign carmakers, like the US-based General Motors, have abandoned Russia citing poor business prospects, VW has remained committed to the market and funneled new investments hoping for a rebound in activity in the future.

'Exclusive benefits'

The company makes cars at a factory in Kaluga, some 170 kilometers (105.63 miles) southwest of Moscow, and started production at a new engine plant in the city in 2015. It also has two other production sites.

Volkswagen said in a statement it was committed to the Russian market, where it said it provided 6,800 direct and 50,000 indirect jobs, and planned further development there.

"We are thinking ahead over the future and looking for the ways of implementing our global strategy at the Russian market," the company said.

An industry source said Müller's meeting with Putin had been to discuss "exclusive benefits" for his company. Putin told reporters tax privileges offered by the Russian government were already helping support Volkswagen's sales.

Any shoot up in sales of VW cars in Russia would be a big boost for the company that is struggling to put its house back in order following the financial and reputational damage caused by its emissions cheating scandal.

In September 2015, the carmaker admitted to installing secret software in hundreds of thousands of diesel-powered cars to cheat exhaust emissions tests to make the vehicles appear cleaner than they were on the road. The company sold millions of cars worldwide equipped with the faulty software.

In the US, the company has had to plead guilty to criminal charges and pay billions of dollars in fines.

Nevertheless, VW managed to top the global sales chart last year, selling over 10.3 million vehicles across the world, slightly ahead of the Japanese firm Toyota's figure of around 10.18 million vehicles.

sri/uhe (Reuters, AFP, dpa)

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