Fiat agrees to joint venture
MOSCOW (AP):Italy's Fiat SpA and Russian automobile company Sollers announced a €2.4 billion (US$3.3 billion) joint venture on Thursday to produce up to 500,000 vehicles per year in Russia in a bid to become the country's second-largest car maker.
The plant - located in the Tatarstan region 1,000 kilometres (600 miles) east of Moscow - will assemble the Linea, a car developed for emerging countries, and will develop and produce new models from Fiat's alliance with Chrysler. An existing plant will be expanded with new production facilities and a technology park for producing components.
Fiat chief executive Sergio Marchionne and Sollers Director General Vadim Shvetsov signed the deal to set up the joint venture in Naberezhnye Chelny, with Russian Prime Minister Vladimir Putin overseeing the ceremony, a statement said.
The plant will be capable of producing up to 500,000 passenger cars and SUVs annually by 2016, with at least 10 per cent of production intended for export, the statement said.
The joint venture counts on support from the Russian government in getting long-term loans at a favourable, subsidised interest rate for the entire amount of the investment, according to the statement.
Putin pledged to consider allocating €2.1 billion in loans, saying that the state is willing to help the new venture as long as it produces at least 50 per cent of the components locally as promised, Russian news agencies reported.