MOSCOW - The Ford Motor Co. joint venture in Russia that was put on hold two months ago is back on track.
Ford has set a target date of 22 October to announce the $250 million plant near St. Petersburg, said Nigel Brackenbury, Ford's general director of Russian operations.
General Motors' plans to set up a joint venture with AvtoVAZ is also still alive, said senior executives at last month's Moscow Motor Show.
Ford's on-off plan was delayed two months ago when Ford Chairman Alex Trotman said 'it didn't feel right.'
Now, said Brackenbury, 'We are hopeful we can conclude a viable plan by the end of the year.' The plant would build Transit and Escort models initially from complete knock-down kits, at a pace of 25,000 a year. Local content would rise to 50 percent in five years, while volume rises to 100,000. The partner is Russian engine maker Russky Dizel.
'Our strategy is unchanged despite the turmoil,' said Brackenbury.
While details of the plan are being formalized, Ford is concentrating on expanding its dealer network in Russia.
Ford sold 6,150 vehicles last year and 3,000 in 1996. Sales for the first seven months of 1998 were 30 percent ahead of 1997.
Meanwhile, David Herman, GM's head of Russian operations, said GM was closing in on an agreement with AvtoVAZ.
'We have been talking to AvtoVAZ for a long time, but the reason we have not finished our discussions is not because of the troubles at VAZ or the economy,' Herman said. 'We need to know if we can find enough customers who are prepared to spend between $12,000 and $15,000 on a car.'
GM wants to establish a joint venture with AvtoVAZ that would make a version of the Opel Astra. 'We expect to complete a deal in a few months, and if we do, we could begin production 18 months later,' he said. Ownership is likely to be 50-50.
The deal, like Ford's, is designed to meet the terms of Russian President Boris Yeltsin. His automotive industry decree promises concessions when investments are more than $250 million and local content reaches 50 percent within five years of start-up.
GM has launched a supplier development program in Russia, intended to encourage GM's existing suppliers to follow.
'We're trying to interest Delphi in coming in with us and taking over some parts of AvtoVAZ's own component facilities, which would free up resources for the new JV,' Herman said. 'There are many things that VAZ makes that we would put in our cars.'
AvtoVAZ had two big attractions for GM: engineering skills and a dealer network.
'Our strategy is to use AvtoVAZ's substantial engineering capacity to develop a version of the Opel Astra specially adapted for Russian conditions,' said Herman.
This would be based on the new fourth-generation Astra rather than the third generation Astra Classic GM builds in Poland.
'Taking several hundred dollars out is not enough,' said Herman. 'The project requires a very substantial engineering effort.'
Meanwhile, GM is continuing to prepare its plant in Tartarstan, a former Soviet Republic. A paint shop is currently being commissioned from German supplier Duerr. The plant now builds Chevrolet Blazers from CKD kits supplied from Brazil.
Herman said local content will rise to 50 percent or more in five to seven years, when production could reach the capacity of 50,000 units a year.
The third part of GM's thrust into the CIS market is paying Daewoo to produce Astras in the Ukraine at AvtoZAZ-Daewoo. GM tried to buy the plant but lost out to Daewoo last year.
'We expect to complete a contract with AvtoZAZ for contract assembly, so we won't invest in the plant but will simply pay for production,' said Herman. 'The plant is likely to assemble Astras at a rate of around 25,000 units a year.'