Russian auto boomtown grinds to halt

STORY: The small Russian city Kaluga was a boomtown for foreign investment, but then the Russia-Ukraine conflict began.

Since then, the city has felt the effects of Western sanctions and thousands of auto workers have been furloughed.

Valery Uglov is a mechanic at the region's Volkswagen factory.

"The only question is when can we start to work again, because such an uncertain situation worries people. We have had downtime for weeks, we hope to return to work as soon as possible and everyone will have confidence in the future again."

Kaluga says it has drawn in $15 billion of mostly foreign investment since 2006.

Now though, sanctions have worsened component shortages and stopped production at the region's Volkswagen and Volvo car plants.

Another - a joint venture between Stellantis and Mitsubishi - may also stop production soon due to a lack of parts.

Angelina Minnigulova, a marketing executive at VW dealer KorsGroup, said demand for buying cars had fallen.

"The prices have increased, the situation in the country is unstable, but we all hope that in the near future everything will stabilize in the country and at our dealership, at the plant, and sales will be good again."

The plants have shut just as workers found they need more money to buy groceries.

Analysts forecast Russian inflation could soar to 24% this year and the economy could shrink back down to 2009 levels.

The hardships felt in Kaluga are a far cry from the devastation the war has caused for Ukrainians.

International outrage spread on Monday (April 4) over civilian killings in northern Ukraine.

The deaths are likely to push the U.S. and Europe into raising more sanctions against Moscow.

Russia calls its actions in Ukraine a "special operation" and the Kremlin categorically denied all accusations related to the murder of civilians.