Fiat may postpone the construction of a plant in Sankt Petersburg, Russia, because of overcapacity in Europe, a Russian official said.

The Italian carmaker planned to invest 850 million euros to open a plant with an annual output of 120,000 units in 2013 in Russia second-largest city. However, the carmaker has not contacted the regional administration for three months and has not presented an investment plan, according to Sankt Petersburg’s deputy governor, Sergey Vyazalov.

“The company has enough capacity in Europe to deliver cars to the Russian market. So I expect it will delay the project for several years,” Vyazalov was quoted as saying by Bloomberg. Fiat CEO Sergio Marchionne told reporters at the Paris Motor Show that the company is working on its strategy to expand in Russia and is currently defining details with Russian banks. “There is a boom in the market, we made the right choice to enter it with our Jeep brand,” Marchionne said.

New-car sales in Russia rose 15 percent to 1.9 million in the first eight months of this year from the same period a year earlier, according to the Moscow-based Association of European Business. However, Fiat brand sales dropped 74 percent to 5,054 while Jeep brand sales rose 300 percent to 2,957 vehicles.


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