Fiat reveals plans for production in Russia

Administrator Sat Feb 26, 2011 8:35 pm

Fiat reveals plans for production in Russia

Published: February 25 2011 22:42 | Last updated: February 25 2011 22:42

Fiat has told Russia’s government that it plans to install capacity to produce up to 300,000 vehicles in the country, mostly under its own brand and its US partner Chrysler’s Jeep marque.

The Italian group’s announcement on Friday signalled its intent to go it alone on a major push into the Russian market, and came a week after local producer Sollers said it had broken off talks with Fiat and would produce cars and commercial vehicles with its rival Ford Motor.

Fiat said it had submitted a memorandum of intent to Russia’s Ministry of Economic Development ahead of an end of February deadline set by Moscow for carmakers to present their production plans.

Volkswagen on Thursday said that it planned to make more than 100,000 Skoda and VW vehicles a year under contract at Gaz, the Nizhny Novgorod-based carmaker owned by tycoon Oleg Deripaska.

Under Russia’s Decree 166, the country will, as soon as next month, tighten requirements on the local content generated by carmakers in a bid to boost employment and the country’s automotive supply base.

Fiat was Russia’s 27th-ranked car brand in Russia last month, according to the country’s Association of European Businesses trade group.

The Italian producer, which is seeking to expand outside Western Europe’s stagnant market, had spoken of producing as many as 500,000 vehicles a year in Russia by 2016 when it was still in talks with Sollers, formerly known as Severstal-Auto.

Fiat said on Friday that its product plan would mainly be based on production of midsize “C” and upper-middle “D” segment cars, sport utility vehicles, and vans. It said that the Fiat and Jeep brands would be the “mainstay” of the project, but that it would also import some vehicles to complete its product range.

The Italian group gave no details on how much it planned to invest in Russia, or where it would build its vehicles.

Russia’s car market, after collapsing during the financial crisis, is now recovering strongly thanks to government incentives that favour automakers who produce locally.