GM May Build New Factory in Russia
GM May Build New Factory in Russia
Quote:
General Motors Corp. may build a new car production facility in Russia, officials said Monday, several months after the U.S. automobile giant's landmark joint venture temporarily shut down amid a parts dispute with its state-controlled Russian partner.
The Economic Development and Trade Ministry's Web site said GM Vice President Carl-Peter Forster will conclude the deal at an evening signing ceremony. The ministry gave no further details except to say that the deal was connected to a government resolution regulating the import of car parts.
Marc Kempe, a GM spokesman for Europe, confirmed that Forster would be in Moscow, but denied that any final deal had been reached.
"Yes, we are in negotiations looking at the possibility of investing in an assembly plant, but no, no final decision has been reached," he told The Associated Press.
General Motors was an early major foreign investor in Russia's automobile industry, launching a US$340 million (euro285 million) joint venture with Soviet-era manufacturer AvtoVaz in the Volga River city of Togliatti in 2001.
In recent months, however, production temporarily halted due to a parts dispute, leading to speculation that the venture would be broken up and that GM would follow other major international car manufacturers' lead and build its own plant.
The two sides were also unable to agree on the joint construction of an engine plant in the central city of Samara last year, with AvtoVaz saying it feared that it wouldn't be able to recoup its investment.
According to Russian media reports, GM has already earmarked a 70-hectare (170-acre) site outside of St. Petersburg, for the plant, which will produce the Chevrolet Aveo and Lucetti models.
AvtoVaz last year was effectively taken over by Rosoboronexport, the state arms export agency.
Major international automakers have steadily increased their investment and production in Russia, seeking to tap the nation's growing middle class and a lack of quality Russian-designed and built vehicles.
Toyota broke ground on a $140 million facility outside of St. Petersburg last year, as did France's Renault SA, which opened a $250 million assembly plant for its Logan model in Moscow and South Korea's Kia Motors Corp., which launched an assembly line for its Spectra model in the central city of Izhevsk.
According to the European Bank for Reconstruction and Development, Russia has about 157 cars per 1,000 people, putting it on par with Argentina, but far below the Polish average of 250.
