Auto Channel

Russian foreign investment from car companies is booming in 2007. The cash flow will exceed $1.8 billion this year, according to reports by the Russian economics ministry, which signed 13 investment agreements under production contracts in 2007. Among those foreign companies are PSA/Peugeot-Citroen, Suzuki, Hyundai, Severstal-Avto, Nissan and Toyota. Future growth in the Russian market is the motivating factor.

Europe’s number one carmaker Volkswagen opened a car assembly plant in the Kaluga Region located some 180 km southwest of Moscow in November 2007. Also, Toyota launched a plant near St. Petersburg earlier this month which is producing the Camry. The company was followed by domestic rival Mitsubishi Motors, that signed a contract with Russia's economics ministry in the last week of 2007 to invest $200 million in building a car factory in the Kaluga Region. Just hours later there was an official report that PSA/Peugeot-Citroen had selected Kaluga for its Russian plant to cater for one of the fastest growing car markets.

Scheduled to open in 2010, the new factory will produce vehicles in the midsize segment, which represents nearly 60 percent of all sales in the Russian market. Nevertheless, PSA said that it might open up its intended Kaluga assembly plant in Russia to other car companies in order to reduce costs. The French company and Mitsubishi have agreed for a tie-up under which the Japanese automaker builds 4X4 vehicles such as the C-Crosser and Peugeot 4007.