Italian car giant Fiat is to invest $1.1 billion in Russia to build two auto plants, the latest big investment pledge from a foreign manufacturer, a top economy official said on June 01. "Fiat's investment will amount to $1.1 billion," Dmitry Levchenkov, head of the department of special economic zones at the economy ministry, was quoted by the Prime Tass news agency as saying.
Fiat plans to build a factory with an annual production capacity of 120,000 vehicles and a engine plant in the industrial hub of Nizhny Novgorod east of Moscow, he added.
According to the economy ministry, Russia has also signed agreements between March and May this year with other auto groups worth a total of $5 billion for the production of cars in Russia.
Russian firm Sollers and Ford of the United States are to invest $1.2 billion with the aim of producing 300,000 units annually while another consortium led by Russia's Avtovaz and the Renault-Nissan alliance is investing up to $2 billion to build 300,000 cars a year.
General Motors meanwhile is expecting to invest $1 billion while Germany's Volkswagen is to invest $900 million, Levchenkov said. With demand for unfashionable Russian brands still sluggish, Russia is encouraging foreign carmakers to produce their own cars in Russia in joint ventures with local companies.
The Russian auto market is now showing signs of recovering after enduring a torrid slump during the global economic crisis, with sales in 2009 plunging 49 percent.