TURIN -- Fiat Group Automobiles and its partner Severstal Auto will open a new plant in Russia to help capture a bigger share of the countrys booming foreign-car market.
The factory will make about 60,000 units a year of the Fiat Linea, a company source told Automotive News Europe.
The plant will be located in Yelabuga, which is in Russias Volga region, and is set to open in 2009. It will be a 50-50 joint venture with Severstal.
Fiats sales are booming in Russia because consumers there are choosing Western cars, which they see as more stylish and reliable, over domestic brands such as Lada.
Through eight months Fiats Russian sales rose to 10,598 units from 18 during the same period last year.
Russia will soon become one the worlds most important car markets, not only by volume, but also for defining trends, Fiat group Marketing Director Luca De Meo told ANE.
Chris Lacey, General Motors executive director for central and eastern Europe, said he expects new-car sales in Russia to reach 2.7 million units this year -- 1.8 million for non-Russian brands and 900,000 for domestic automakers. That would be 50 percent higher than in 2006.
Last month Fiat and Severstal signed a letter of intent to form a 50-50 joint venture in Russia where, until this year, Fiat was missing out on the surge in foreign-brand car sales.
Fiat group CEO Sergio Marchionne said in a statement that Severstal will benefit from Fiats marketing and production expertise while Fiat will gain from Severstals knowledge of the Russian market.
The Yelabuga plant will be part of Fiats worldwide manufacturing network, which means that Severstal gains access to Western production techniques. The joint venture also will include a Russia-based, Fiat-controlled distribution unit that will share sales skills with Severstal.
Until the Yelabuga plant is ready, Severstal will make the new Linea at its factory in Naberezhniye Chelny, about 25km east of Yelabuga.
The Linea, a lower-medium sedan, is about the size of an Opel Astra sedan. It is currently only sold in Turkey.
A growing partnership
Production starts in the first quarter of 2008.
Last year, Fiat and Severstal signed a licensing agreement. Severstal buys complete knockdown kits of the Fiat Albea sedan and Doblo car-derived van. The Russian company assembles the models in Naberezhniye Chelny and sells them as Fiats in Russia.
As part of that deal, Severstal also bought the assembly line for the previous-generation Ducato light commercial vehicle.
Fiats massive sales increase compared with last year made it Russias 19th-ranked foreign brand, up from 45th out of 46, according to the Association of European Businesses in the Russian Federation.
Chevrolet is No. 1 after eight months with sales of 114,964, followed by Ford at 105,858.