Mazda to set up Russian joint venture with Sollers image

Mazda Motor Corporation has announced plans to build cars in Russia in a joint venture with local automaker Sollers.

The Japanese automaker said that it has signed a memorandum of understanding with Sollers to open a new factory in the city of Vladivostok of Russia’s Far East. The plant will build Mazda models for the Russian market.

The two partners will invest about $80 million in the joint venture, with the facility to start operating in the autumn of 2012. The plant will produce about 25,000 cars a year. Mazda received a special permit from Russian authorities to start production as the management promised to “contribute in the social and economic development of the region”, according to Kommersant Daily. Mazda will be able to import auto components with a reduced customs duty and transport its vehicles from Vladivostok to the European part of Russia for free until 2013.

Earlier this year, Sollers has also entered ventures with other automakers, including Ford and Toyota, to take advantage of government incentives to increase local production. Mazda sales in Russia rose 77 percent between January and September 2011, to 28,000 vehicles, making it the carmaker’s second-biggest market in Europe after Germany.

Mazda builds most of its cars in Japan and is seeking to reduce exports due to the strong yen that affects its profit margins. In June, Mazda said it would build a factory in Mexico.