Fiat and Chrysler to produce 500,000 vehicles in Russia

In at statement released by the Russian government, Fiat SpA plans to produce 500,000 Fiat and Chrysler vehicles in the country as part of a 2.4 billion euro ($3.3 billion USD) joint investment with its local partner.

Russian Prime Minister Vladimir Putin will travel to the town of Naberezhnye Chelny today to oversee the signing ceremony between Sollers and Fiat CEO Sergio Marchionne.

The new plant in the town will assemble nine Fiat and Chrysler models, the government said.

It said that Fiat and Sollers’ joint venture would become Russia’s second-largest automaker. Currently, AvtoVAZ, in which Renault SA owns a 25 percent stake, is Russia’s largest automaker.

– By: Omar Rana

Press Release:

Fiat and Sollers Establish Global Alliance in Russia

A FIAT GROUP Sollers press release follows. Please note 2.4 billion EURO = US $ 3.3 billion

Fiat S.p.A. and SOLLERS have announced the establishment of global alliance in the format of a joint venture for the production of Passenger Cars and SUVs. The Memorandum of Understanding was signed by Vadim Shvetsov, CEO of SOLLERS, and Sergio Marchionne, CEO of FIAT Group, in the presence of Vladimir Putin, the Prime Minister of Russia.

The total production capacity of the new JV will be up to 500,000 vehicles per year by 2016. Nine new models (C and D segments, SUVs) will be marketed on the Russian market with up to six to be produced on a new global FIAT-Chrysler platform. A minimum 10 percent of the produced vehicles will be shipped to export markets. The FIAT/SOLLERS project will be implemented in Naberezhnye Chelny, located 1,000 Km East of Moscow in the Republic of Tatarstan. The SOLLERS-Naberezhnye Chelny plant production site will be expanded by new production facilities and a technology park for component production.

Development and technical adaptation to the Russian market of the new vehicles will be carried out at the Engineering Technical Centre of the JV, with intellectual property rights for the platform to be contributed to the JV.

Target localization within the framework of the given project will reach no less than 50 percent, including the production of engines and gearboxes and the establishment of a new technology park for the production of components. Moreover, the required components will be produced at the production site of ZMZ and at the new technology park in Togliatti.

Thus, the establishment of FIAT/SOLLERS JV in Russia will become one of the biggest investment projects in the Russian automotive sector and will include all key aspects of vehicle production with high added value.

For implementation of the project the JV expects to get the support from the Russian Government in raising long-term loans at a favorable subsidized interest rate for the whole amount of the investments required, estimated at € 2.4 billion.

“The plans to implement a full-scale joint project reflect our confidence about the future development of the Russian automotive market. By establishing one of the global production centres specializing in the development and production of FIAT and Chrysler Group vehicles in Russia, we will be able to offer our customers the most desirable products in the most attractive passenger car segments and to occupy leading positions in the growing Russian market in forthcoming years,” said Vadim Shvetsov, CEO of SOLLERS.

For Sergio Marchionne, CEO of Fiat Group and Chrysler Group, “Today”s agreement marks a turning point for our presence on the Russian market. This is one of the largest alliances signed by our Group in one of the World”s most important markets. This partnership forms part of Fiat Group”s and Chrysler Group”s strategy of increased internationalization which will allow us to also leverage our two Group”s know-how, expand our geographical footprint, increase customer choice and achieve cost benefits.”