MOSCOW – Volkswagen Group will stop output in Nizhny Novgorod, Russia, where VW and Skoda cars were being assembled under contract with GAZ Group, a trade union said, citing the company’s message to the plant’s staff.

VW announced in March that production at its Kaluga and Nizhny Novgorod sites would be suspended until further notice amid Western sanctions, and vehicle exports to Russia would be stopped with immediate effect.

Citing VW’s announcement to the staff made on Tuesday, the Workers’ Association trade union told Reuters that the German company would end its operations in Nizhny Novgorod, about 430 km northeast of Moscow.

The reason for the move was a “lack of EU-produced parts, critically important components from Ukraine and lack of domestically made equivalents, disruption of logistics chains and inability to predict the terms and conditions of resumption of work,” chairman of the trade union Dmitry Trudovoy said, citing VW’s statement to its staff.

According to Trudovoy, assembly equipment and other machinery will be moved to VW’s Kaluga plant, which the automaker owns directly. VW employs nearly 4,200 workers at Kaluga.

VW declined to comment on the decision to end production but said it closed its Nizhny Novgorod office starting July 5, citing “high level of uncertainty and the inability to predict the potential resumption of production.”

The bulk of its 200 staff members at the Nizhny Novgorod plant have taken payoffs and quit voluntary and 60 people will be affected by the office closure, VW added.

VW Group and GAZ signed their contract assembly deal in 2011. More than 400,000 VW Group vehicles were assembled at the plant using the complete knockdown kits during the duration of the contract, according the VW Group Russia web site

The Nizhny Novgorod plant builds the Volkswagen Taos alongside the Skoda Kodiaq, Karoq and Octavia models.

GAZ does not plan to close the plant, Interfax said on Tuesday. Instead, the company is looking for options to fill it with other orders, as production there was temporary suspended.

GAZ did not reply to Reuters’ request for a comment.

GAZ, under U.S. sanctions since 2018, was granted sanctions exemptions annually but its latest waiver expired on May 25 and was not renewed.