Russian state bank ready to invest in Ford-Sollers JV
Russia's state development bank VEB said it was ready to invest in a joint venture between the Russian carmaker Sollers and Ford Motor Co.
"We are ready to participate but we do not yet have an agreement with the partners," VEB's CEO Vladimir Dmitriev told journalists.
On Friday, Sollers announced it had dropped a joint venture project with Fiat S.p.A. and instead would team up with Ford as the U.S. car maker seeks to step up its presence in the booming Russian market.
Sollers and Ford are planning to take out a 10-year loan for $1.2 billion, with two thirds of interest payments subsidized by the government, Russia's Kommersant daily said.
According to Boston Consulting Group, Russia will be the sixth-largest global auto market by 2020 with annual sales of 4 million units, up from its current 10th position. Russia may overtake Germany by 2018 as the largest market for passenger cars and light commercial vehicles in Europe, the consultancy said.
Building the brand in Russia
Ford and Sollers plan to set up local production facilities in Vsevolozhsk in the St. Petersburg region and in Tatarstan to build a range of Ford passenger cars and light commercial vehicles.
Ford of Europe CEO Stephen Odell said on Friday that the proposed joint venture will help build the Ford brand in Russia and create a profitably growing business.
"It also will help to strengthen the Russian automotive industry and its local supply base," he added.
Ford and Sollers said their joint venture will also produce engines and operate a stamping facility that will provide a higher level of local parts content for Ford vehicles built in Russia. It will also establish research and development activities.
The joint venture is scheduled to start operations by the end of this year.
Reuters contributed to this report