Fiat to produce cars in Russia

Fiat SpA submitted a plan to the Russian government to build as many as 300,000 cars a year in the country, after last week ending talks on a 2.3 billion-euro ($3.3 billion) deal with OAO Sollers.

“The product plan will be principally based on production of C and D segment cars, SUVs and light commercial vehicles,” Fiat said in a statement Friday. “The Fiat and Jeep brands will be the mainstays of the project.” Sollers signed an agreement with Ford Motor Co. after talks with Fiat ended.

Fiat, which also runs Auburn Hills, Michigan-based Chrysler Group LLC, is targeting fast-growing economies to counter losses in Europe, its biggest market. Ford, Volkswagen AG and Toyota Motor Corp. are increasing Russian output and adding models as the nation’s economy expands and government incentives spur purchases. 

Russia may become the world’s sixth-largest auto market in 2020, with 4 million deliveries a year, the Boston Consulting Group said in a report earlier this month. The nation is now the world’s 10th-largest car market, with 1.9 million annual sales, according to the Boston-based consulting firm.

Ford Sollers will manufacture Ford vehicles at plants in St. Petersburg and the Republic of Tatarstan, east of Moscow, starting this year. Ford and Sollers will each own half of the venture, the companies said. Sollers also makes vehicles in Russia for Ssangyong Motor Co. and Isuzu Motors Ltd.

Russian car sales may advance about 16 percent to as many as 2.2 million units in 2011, Marcus Osegowitsch, VW’s Russia chief, said last month. A stable ruble, broadening consumer confidence and improved credit conditions may continue to drive demand, he said.

Russian new car sales jumped 72 percent to 127,564 last month from the same period a year earlier as consumers took advantage of a state cash-for-clunkers program.

OAO AvtoVaz is Russia’s largest automaker. 

(Bloomberg)