VW to build engine plant in Russia to tap growing local demand
BERLIN (Bloomberg) -- Volkswagen Group plans to add engine production in Russia to expand manufacturing in the country's growing car market.
VW will spend 250 million euros ($314 million) at its car assembly plant in Kaluga to have the capacity to assemble 600 1.6-liter gasoline engines daily beginning in 2015, production chief Michael Macht told reporters in Moscow today.
Volkswagen opened its car plant in Kaluga, about 170km (106 miles) southwest of Moscow, in 2007. Last year, the factory assembled 125,000 vehicles, including the VW Tiguan SUV, Polo subcompact as well as the Skoda Octavia and Fabia.
VW signed a deal last year with billionaire Oleg Deripaska's GAZ to produce 110,000 VW and Skoda vehicles a year at the Russian manufacturer's facility in Nizhny Novgorod, 418km east of Moscow.
The Skoda Yeti SUV will be the first vehicle from the cooperation, with production slated to start this year.
Russia is poised to surpass Germany as Europe's biggest auto market by 2014, when total sales are projected to rise to 3.4 million cars, according to the country's industry ministry.
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