Vw Ag. and Russian vehicle manufacturer GAZ Group are finalizing plans for a joint venture capable of producing 300,000 cars per year, Reuters said, citing two unnamed auto industry sources.
The joint venture will make a range of Volkswagen brands including the Jetta, Skoda Octavia and Skoda Yeti models, the sources said.
GAZ, controlled by industrial tycoon Oleg Deripaska, would use its plant in Nizhny Novgorod for the joint-venture project, while VW would use its Kaluga facility in Russia.
The Nizhny Novgorod plant was designed to build the Volga Siber, a midsize sedan based on the previous-generation Chrysler Sebring. Production of the Siber was suspended late last fall because of slow sales in Russia.
In addition to the Siber, GAZ also builds light commercial vans and trucks, and recently reached an agreement to assemble Mercedes-Benz Sprinter vans.
The Boston Consulting Group said this week that Russia would be the sixth-largest global auto market by 2020, with annual sales of 4 million units, up from its current 10th position. MOREOVER, Russia will overtake Germany by 2018 as the largest producer of passenger cars and light commercial vehicles in Europe, the consultancy said.
The long-awaited deal would need to be signed this week to meet an end-February deadline set by Russia’s government for carmakers to outline plans to boost the local content in their cars, according to Siegfried Wolf, chairman of Russian Machines, the industrial holding group that owns Gaz.
GAZ Group was established in 2005 through restructuring of the manufacturing assets of OAO RusPromAuto that had been in existence since 2001. GAZ Group comprises OAO GAZ, 18 automotive plants in Russia, distribution and service companies. The headquarters of GAZ Group is located in Nizhny Novgorod. Russian Machines Corporation is the controlling shareholder in OAO GAZ.