Peugeot to Partner AMO ZIL to Assemble Vehicles in Russia image

PSA Peugeot Citroen confirmed its plans to form a partnership with Russian manufacturer AMO ZIL, as the French company plans to expand in this market.

“We’re in talks with them, ” Jean-Baptiste Thomas, a Peugeot spokesman, said by phone. “But they’re just one among many interlocutors we’re talking to, in Russia and elsewhere.”

Today, March 4th, Russian newspaper Vedomosti published a report according to which the two companies plan to assemble vehicles in Russia. ZIL might begin assembling Peugeot and Citroen light commercial vehicles, according to an anonymous source. As Peugeot’s situation in its home market is more than dramatic, the automaker’s only possibility to survive is to find partners for collaborations.

In 2012 Peugeot reported an operating loss of 576 million-euro ($749 million) in Europe, therefore the automaker plans to sell more than 50% of its vehicles outside the European market by 2015. Analysts predict that the Russian auto market will surpass the German one in volume by 2017, these prospects convincing other automakers, such as VW, Ford and Renault, to expand capacity in Russia. GM and its partner in Russia, GAZ Group, have already begun increasing capacity of the Chevrolet Aveo to 300,000 units annually.