VW keeps to Russia growth plan as Europe weighs sanctions

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HANOVER, Germany (Reuters) -- Volkswagen Group will stick with ambitious expansion plans in Russia even as European leaders consider sanctions over the country's seizure of Crimea, CEO Martin Winterkorn said.

"I believe we should not scale back our activities [in Russia] because of this," Winterkorn said on Thursday on the sidelines of a conference in Hanover, Germany.

Volkswagen is building a new engine factory in Kaluga, where it already employs more than 5,100 people at an assembly plant that makes VW and Skoda models.

VW spent 1 billion euros ($1.4 billion) on Russian operations from 2006 to 2013. The company said in December 2012 that it would invest a further 840 million euros in its sixth-biggest market through to the end of 2015.

"Our sales numbers continue to look good, but we're paying very close attention to what is happening there," Winterkorn said. "Investments are still running; we will not stop the [new] engine plant."

VW's finance chief Hans-Dieter Poetsch last week said that the carmaker was grappling with effects of "extreme" currency volatility that was placing a "clear burden" on operations in Russia.

VW Group has a 10.5 percent market share in Russia and sold 37,836 VW, Audi, Skoda and Seat vehicles in the country in the first two months, according to the Moscow-based Association of European Businesses.

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