Volkswagen Group brand Skoda is in the advanced stages of exiting Russia after taking an almost €700 million hit as a result of Moscow’s invasion of Ukraine. The Czech automaker, which is one of the backbones of the country’s industrial output, has faced major disruptions caused by the war and the subsequent Western sanctions on Russia. Its net profit dropped 11.7% to €489 million in 2022, hit also by a surge in material prices and global supply chain bottlenecks.

Skoda’s deliveries in Russia plummeted to 18,300 cars in 2022 from 90,400 in 2021, when the country was Skoda’s second-largest market.

“The talks (on the sale) are in the final stages, but I can’t give you details until they are agreed by all parties,” Skoda Chief Executive Zellmer told an annual press conference.

He said Skoda aimed to replace lost Russian production at its other plants around the globe.

Volkswagen brand chief executive Schaefer made similar remarks on Thursday.

On prospects for this year, Skoda said production and sales should exceed last year, when global deliveries dropped to 731,300 cars.

This should be helped in part by Skoda’s upcoming entry into the Vietnamese market, where it will start selling its cars in the second quarter. The automaker estimated the initial potential at 30,000 cars.

Skoda will also take over strategic management of Volkswagen’s expansion in South East Asia.