European countries are shoring up resources to send unprecedented defense armament supplies to Ukraine. But an Austrian entrepreneur Siegfried Wolf, on the board of European automaker Porsche SE, has offered to rebuild the Russian automobile sector hit by the long-drawn Russia-Ukraine war.
Porsche SE is headquartered in Germany and is owned by a German-Austrian family.
Making a pitch in a letter addressed directly to the Russian leader Vladimir Putin, Wolf asks for Euro 800 million (60 billion rubles) to revive the Russian automobile industry with a production capacity of 270,000 vehicles every year.
The three-page letter that comes on the heels of a year since Russia invaded Ukraine starts with “Dear Vladimir Vladimirovich!” Putin’s full name is Vladimir Vladimirovich Putin
Wolf is one of the strongest players in the European automobile industry and sits on the supervisory boards of German car parts supplier Schaeffler.
A billion-dollar holding company, Porsche SE is said to have a foot in the door when it comes to Russia. He is one of the few German-speaking business leaders with strong contacts with heads of corporations and oligarchs in Russia and President Vladimir Putin.
The letter has been accessed by the German weekly news magazine Der Spiegel. The letter referring to the ongoing war as “difficult conditions” writes that Russia is facing a shortage of high-quality cars. He notes that his “new investment project to restart production of passenger vehicles” could “solve this problem.”
Wolf wants to collaborate with the leading Russian car maker GAZ group to implement his solution for the stalled industry. He proposes to use two plants whose production has been suspended since spring 2022, including a factory in Kaluga, southwest of Moscow, owned by German carmaker Volkswagen.
Calling himself “a globally renowned investor,” Wolf claims to have “in principle” agreement of the top brass of Volkswagen, the company controlled by Porsche SE.
Wolf has held several management positions within the oligarch Oleg Deripaska’s empire and has partnered with the Russian billionaire. Deripaska is now on the sanctions list of the US and the European Union.
He was also a member of the supervisory board of Russia’s GAZ Group until the end of 2022. He still holds a 10 percent stake in the company. The ongoing geopolitics notwithstanding, Wolf still wants to expand business in Russia.
As per Der Spiegel, Wolf already has one deal – Schaeffler’s Russian operation. In December 2022, the multinational auto supplier group based in the Bavaria region of Germany opted for Wolf’s Russian company PromAvtoKonsalt to buy its Russian business. The acquisition will be consummated as and when the Russians approve the deal.
The deal will benefit immensely as the Schaeffler plant can also be used to support the production of GAZ’s Sadko lines of vehicles. It is a cargo truck also used by the Russian military to transport troops and equipment.
Wolf’s Plan For Reviving Russian Auto Industry
The Russian car industry is in the doldrums, and production has slumped to its worst since the collapse of the Soviet Union. The war, followed by the Western sanctions and the departure of global players, has hit the industry hard.
The flailing Russian economy and reduction in car production point that the spending on new cars slumped by 52 percent compared to last year. The number of new cars sold has tumbled by 58.8 percent. Russians are now turning to buying used cars.
The revival plan put forth by Wolf entails resurrecting the “legendary Russian brand Volga.” The production of Volga was ceased by the GAZ group in 2010. Now the Austrian would like to use the factory facilities and know-how of the VW Group, which, after the start of the war, suspended production at its own plant in Kaluga and withdrew from production cooperation with GAZ in Nizhny Novgorod.
The proposed timeline calls for restarting the car production at the two plants by the second half of 2023. In his letter to Putin, Wolf explained that the vehicles “should have a Russian design and be completely redesigned from the outside to bring out the characteristics of the legendary Volga and Pobeda models,” describes Spiegel.
When Putin, who has held the position of Prime minister or President in Russia since 1999, threw the gauntlet at the West by invading Ukraine, little did he imagine that the war would stretch out for over a year, crippling the country’s economy. During these difficult times, the Kremlin can use all the help to rebuild the economy.
Volkswagen has been quick to distance itself from Wolf’s plan. The company’s management also denied knowledge of the letter and “its irritating content.” The German magazine Der Spiegel also raised questions about Wolf’s business practices.
“How are a member of multiple supervisory boards in Europe and someone with deep insider connections to German industry able to maintain such close ties to Putin? And whose side is he on, anyway, in the conflict between Volkswagen and Russia’s GAZ Group?” the magazine article read.
It remains to be seen how effective are Wolf’s plans to revitalize the half-dead Russian auto industry. Regardless, the letter embarrasses the countries as they are bulwarking their defenses against a belligerent Russia.
- Ritu Sharma has been a journalist for over a decade, writing on defense, foreign affairs, and nuclear technology.
- She can be reached at ritu.sharma (at) mail.com