Magna Signs Deal With Avtotor Holding to Enter Russia image

Canadian Magna International will enter the Russian market by teaming up with automaker Avtotor Holding.

The auto-parts maker Magna International and Avtotor Holding will set up 6 full-cycle vehicle-assembly operations for different automakers and will build 15 plants in the Kaliningrad region. These plants will supply Avtotor and other automotive firms in Russia, producing the maximum capacity of 250,000 by 2018.

According to Russia media, 60% of the JV will be owned by Avtotor and 40% by Magna. Avtotor Chairman Vladimir Shcherbakov said earlier this year that the company will invest $3.2 billion in this project. Many automakers begin to focus on Russia as sales are expected to reach 3 million vehicles this year, return to levels before the crisis. Analysts predict that Russia will surpass Germany, becoming Europe’s largest auto market by 2014.

“Russia is an important automotive market with the potential to become the largest market in Europe,” said Guenther Apfalter, president of Magna International Europe.

Magna will offer Avtotor support in the technical preparation and conceptual design of the cluster, also serving as a partner for the localization of components production in the Kaliningrad region, considered a Russian enclave on the Baltic Sea between Lithuania and Poland.