Since the war in Ukraine began, automakers with ties to the country and its invader, Russia, have been forced to respond.
Companies like Volkswagen that have employees and suppliers in both nations have had to handle the fallout from both sides of the conflict, but the strongest repercussions on the industry have come from the sanctions imposed on Russia.
Stellantis’ current situation demonstrates this perfectly. Early in the war, the European conglomerate halted production in its Russian van-building facility and suspended all exports and imports of vehicles with the country.
Now it seems that continued sanctions have forced that halt to turn more permanent. Jerry
, your car-ownership super app
, looked into the matter further to keep you up to date. Stellantis’ business in Russia focuses on one town
Stellantis doesn’t represent a large portion of Russia’s auto industry. Reuters
says only 1% of the vehicles sold in Russia come from the company’s catalog of brands. But for one city, its presence in the country means a lot. About 125 miles southwest of Moscow sits Kaluga, a kind of Russian equivalent to Detroit
. It might not have the same history as Motor City, but in the last two decades a number of European automakers have moved into the city, including Citroën, in 2007. In 2019, Citroën became part of Stellantis and continued its partnership with Mitsubishi in Kaluga, employing 2,700 residents to build cargo vans in the facility.
MORE: Russia's War with Ukraine Will Affect the Auto Industry
The invasion of Ukraine forces Stellantis kill the engine in Kaluga
Since the invasion of Ukraine, the plant has only supplied vehicles to the local market. As of April 19, that has also ceased. In a statement, Stellantis
said “the rapid daily increase in cross sanctions and logistical difficulties” were to blame for the plant’s closure. For now, production staff will still be paid using a downtime scheme and vacation pay. But it’s unclear whether that will last through the length of the war—another albeit insignificant reason for everyone involved to hope for peace.
The severing of economic ties with Russia was the West’s first tactic to discourage Vladimir Putin’s assault on Ukraine. Stellantis’ situation shows how the impacts of trade blocks and sanctions will only get worse for Russia the longer they continue with their aggression.
Other automakers react to Russia’s attack on democracy
Stellantis’ slow, measured reaction to the war seems less about taking a stand and more about making shrewd business decisions. The company isn’t alone in this strategy.
Fellow French automaker Renault
, which owns 68% of Russian auto giant AvtoVAZ and employs 45,000 people in the country, took nearly a month to halt operations and announce that it was rethinking its partnership with AvtoVAZ. Other automakers with less of a stake in the Russian auto industry took a more direct approach. Many already started to scale their Russian operations back in 2014, when Putin annexed the Cremean region of Ukraine.
Volkswagen, Volvo, Ford, and GM have all stopped manufacturing and sales in Russia to comply with sanctions, avoid risks, and/or send Putin a message.
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