Auto supplier Continental resumes Russia production

FRANKFURT

German auto supplier Continental said yesterday it had restarted production in Russia after local employees were threatened with “severe criminal consequences” if the company refused to serve local demand.

Continental had announced it would pause production and cease trading with Russia at the beginning of March, just over a week after the start of Moscow’s invasion of Ukraine.

Russian authorities subsequently ordered close supervision of foreign-owned firms that suspend their activities in Russia over the Ukraine crisis.

Russian President Vladimir Putin, without using the word nationalization, said he favored appointing outside administrators to companies that exit the market.

Continental said in a statement that local workers and managers had been threatened with “severe criminal consequences” if Continental refused to “serve local demand.”

To avoid this outcome, the parts maker would “temporarily” restart production of car tyres at its site in Kaluga around 170 kilometers to the southwest of Moscow.

With the restart, first reported by German daily FAZ on April 19, the company said it did not “intend to make a profit.”

A wave of Western companies have decided to close their operations in the country following the invasion of Ukraine.

In Germany, flagship auto manufacturers Volkswagen, Mercedes-Benz and BMW have stopped exports to Russia and closed their local production sites.

The DIY store OBI last week handed over its franchise in Russia to local investors “without payment,” after a reported backlash to the firm’s withdrawal from store managers.

Other companies, including the wholesaler Metro, have continued to operate in the country, citing a “responsibility” to local employees and customers.