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VW mulls moving Ukrainian factory to Serbia - report

Author Radomir Ralev
VW mulls moving Ukrainian factory to Serbia - report License: Creative Commons CC0

BELGRADE (Serbia), March 19 (SeeNews) - Volkswagen is considering the relocation to Serbia of the manufacturing plant it currently operates in Ukraine's Solomonovo, Belgrade-based media reported.

"Due to the situation in that country, the expected results have never been achieved. The potential arrival of Volkswagen would be a fantastic news for our country and economy," Vecernje Novosti daily quoted Milenko Kostic, owner of the general importer of Skoda cars to Serbia, Auto Cacak, as saying on Monday.

The Solomonovo car factory in Ukraine is currently producing the Audi A4, Audi A6, Skoda Fabia, Skoda Octavia, SEAT Leon, SEAT Altea and SEAT Toledo models. The plant was originally designed to manufacture 45,000 vehicles per year but production was dramatically reduced as a result of unfavourable economic conditions in the country, and only 4,000 cars were made in 2016, according to media reports.

Kostic said that representatives of Volkswagen management contacted him last week to enquire about the business environment in Serbia.

"They asked me about the average salary, the training of the workforce, about everything related to business conditions," Kostic said.

Volkswagen needs 300 to 400 hectares for the construction of the factory - an area which is only available in the surroundings of Nis and in the northern autonomous province of Vojvodina, Kostic added. 

Another option is the factory of Fiat Chrysler Automobiles (FCA) Group in Kragujevac, as it is still not certain whether that automotive group will maintain its production operations in Serbia, Kostic said.

"It would be ideal, as there is a factory and thousands of trained workers, but I am concerned about the capacity, because the current Fiat facilities may produce 200,000 cars annually, while the Germans want the capacity to be greater than 300,000."

On Sunday, Serbian president Aleksandar Vucic said a meeting with representatives of Volkswagen will be held by the end of this week to discuss the opportunities for attracting the German auto maker to Serbia.

"Serbia is the strongest, the most stable, and the best country for Volkswagen compared with all friendly countries interested in this investment -- Turkey, Romania, Bulgaria and one other country," Vucic said.

According to Vecernje Novosti, the main advantages of Serbia are the Jadar lithium-borate project in the country developed by Australian mining giant Rio Tinto. Jadar is estimated to contain 10% of the world's deposits of lithium, the primary raw material for production of batteries for electric cars. The construction of a factory in Serbia by German car parts maker Vorwerk, one of the key suppliers of Volkswagen, is also among the Serbian advantages.

In November, Volkswagen chief Herbert Diess said the company was looking for a location for a 1.4 billion euro ($1.6 billion) multi-brand factory in eastern Europe which is expected to start production after 2022. The company plans to move the production of the Skoda Karoq and Seat Ateca SUVs to the new factory, which would employ 5,000, from the plant in Kvasiny, the Czech Republic, Diess said back then.

($ = 0.880812 euro)