Russian auto boomtown grinds to halt over Ukraine sanctions: Report

Thousands of auto workers have been furloughed and food prices are soaring as Western sanctions pummel the small Russian city of Kaluga and its flagship foreign carmakers, with more sanctions likely to come.

The Kaluga region, 190 kilometres (120 miles) southwest of Moscow, says it has attracted more than 1.3 trillion roubles ($15 billion) in investment, mostly foreign, since 2006.

But Western sanctions imposed in recent weeks after Russia sent tens of thousands of troops into Ukraine have exacerbated lingering component shortages and halted production at two flagship car plants, Germany's Volkswagen and Sweden's Volvo.

A third, the PSMA Rus plant that is a joint venture between Stellantis and Mitsubishi and employs 2,000, may halt production soon due to a lack of parts, Stellantis’ chief executive said last Thursday.

Terpugov said he needs twice as much money to buy groceries than before the sanctions. 

Analysts have forecast Russian inflation could soar to 24 per cent this year, while the economy may shrink to 2009 levels.

Volkswagen, whose factory employs 4,200 people, in early March suspended operations. 

A spokeswoman said production remained frozen.

Volvo Group, which employs over 600 people to build trucks, also suspended production.