FRANKFURT -- BMW will add production of the X4 SUV in Russia this summer with local partner Avtotor using kits shipped from the automaker's U.S. plant.
BMW already builds seven models at Avtotor's Kaliningrad plant from semi-knockdown kits. Avtotor will add X4 production for sale in Russia only, a BMW spokesman told Automotive News Europe. X4 assembly kits will be shipped to Russia from the group’s U.S. plant in Spartanburg, the spokesman said.
Earlier this month, BMW said it had postponed a decision on building its own plant in Russia because of the uncertainty caused by the economic crisis.
New-car sales in Russia fell 38 percent through April as customers avoid large purchases in an economy hit by Western sanctions, a weak currency and falling oil prices. BMW brand sales fell 20 percent, according to data from the Association of European Businesses in Russia.
Despite the market's plunge, premium brands are selling better than volume marques as wealthy Russians invest in hard goods in the financial meltdown. BMW and Mercedes-Benz are keen on local production to bypass Russia’s so-called recycling fee levied on all imported vehicles. Mercedes has narrowed down potential sites for a car plant in Russia to three locations, a Russian media report said last month.
Avtotor builds the 3-, 5- and 7-series sedans for BMW, together with the X1, X3, X5 and X6 SUVs, according to Automotive News Europe's European car assembly plant map. Avtotor also produces vehicles for Opel, Chevrolet and Kia.
Mass-market brands including Volkswagen and Ford Motor are reducing production at their Russian plants in response to deteriorating market conditions. General Motors is idling its St. Petersburg factory and ending sales of all Opel models and mainstream Chevrolet cars.
IHS Automotive forecasts that premium brands with local production will profit from a market rebound, according to a report in German industry publication Automobil Produktion. Last year, Avtotor built 25,000 vehicles for BMW. In 2015, output is expected to fall to 21,000, IHS was quoted as saying.
