Volkswagen: Moscow plant cancelled?

We found first rumors that Volkswagen might cancel their plans for a Moscow plant, now favoring other locations.

Volkswagen will not build a plant outside Moscow and is instead considering a half-dozen other locations, a senior Economic Development and Trade Ministry official said Tuesday.

Europe's largest carmaker declined to confirm the statement, but such a decision would deal a blow to the Moscow region administration, which has been courting Volkswagen for the $500 million project for three years.

"To my great sorrow, Volkswagen did not choose to build a plant in Stupino," Yury Zhdanov, head of the ministry's Federal Agency for Economic Zones, told reporters on the sidelines of a conference on special economic zones.

Zhdanov speculated that Volkswagen might have changed its mind about Stupino because the Moscow region lost a tender to become a special economic zone for manufacturing in November. The winners -- Yelabuga, in Tatarstan, and the Lipetsk region -- will be able to provide manufacturers with tax breaks and other benefits. Zhdanov said Volkswagen would announce its decision to look elsewhere soon and it was studying five or six other locations.

Volkswagen spokesman Hartwig von Sass would not say whether the Moscow region had been ruled out. "We have checked 70 locations from St. Petersburg to the Urals, and we are currently looking closer at five," he said by telephone from Wolfsburg, Germany.