The €250m plant will produce the newly developed 1.6-litre EA211 gasoline engine for the Volkswagen Polo and the Skoda Rapid produced in Kaluga, as well as for the Volkswagen Jetta and the Skoda Octavia and Yeti, built jointly with GAZ in Nizhny Novgorod.

The annual production capacity of the engine plant will be about 150,000 units.

Thomas Schmall, member of the Board of Management of the Volkswagen Passenger Cars brand responsible for Components, said: “The development of Volkswagen in Kaluga – starting with the vehicle plant and continuing with the engine plant – symbolizes the strength of this region. We intend to continue this development in future because we believe in the considerable potential offered by the Russian automobile industry.”

Volkswagen added that it will be fulfilling its obligations under the ancillary agreement to Decree 166 reached with the Russian government at the end of May 2011. This determines that, as of 2016, at least 30% of vehicles produced in Russia are to be equipped with engines manufactured locally.