BERLIN -- Volkswagen Group is strengthening its presence in Russia with projects to boost its VW and Skoda brands as well as commercial vehicles as the automaker positions itself for a rebound in the Russian market.
VW said on Thursday it had extended a deal with Russia's GAZ group to produce Volkswagen and Skoda cars at GAZ's Gorky plant until 2025.
The two companies are considering a strategic partnership for supplies and joint assembly of components, and possible projects will be examined in a next phase, VW said.
GAZ already uses components from VW's Scania and MAN heavy-truck divisions for its buses.
"With this letter of intent, we are taking another important step in our global champion strategy and are clearly demonstrating our commitment to the Russian market," VW trucks chief Andreas Renschler said.
The prolonged decline of the once-booming Russian car market caused General Motors to leave in 2015 but VW has kept investing and started making engines at a new plant in Kaluga, some 170 km (105 miles) southwest of Moscow two years ago.
But there are signs of a rebound as Russian new-car sales rose 6.9 percent in April and 15 percent in May.
VW Group, which includes the luxury Audi and Porsche brands, has an 11.2 percent share of the Russian market. Group sales in the country rose 6.8 percent to 64,648 through May, according to data from the Association of European Businesses in Russia. Industrywide sales increased 5.1 percent in the first five months.
As part of the agreement, VW will also supply 2.0-liter diesel engines for light commercial vehicles made by GAZ.
VW said it will deliver a total of 200,000 engines to GAZ over a period of five years, securing more than 50 jobs at its Salzgitter plant in Germany. The plant is starting to supply customers outside the group with engines as part of a corporate overhaul.
VW said its truck and bus division had signed a letter of intent with GAZ to examine a long-term business cooperation in commercial vehicles.