Ford Motor Co. said Friday it plans to form a joint venture with Sollers OJSC, Russia's second-biggest automaker, for the production and distribution of Ford vehicles in Russia.
Ford's announcement came shortly after Fiat S.p.A. said it had ended negotiations with Sollers for a joint venture to build Fiat and Jeep models 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 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 in a statement.
Earlier this week, the Boston Consulting Group said the Russian car market may become the world's sixth-largest by 2020, selling 4 million cars a year, up from the 10th currently. Russia may overtake Germany by 2018 as the largest market for passenger cars and light commercial vehicles in Europe, the consultancy said.
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.