MOSCOW — Russia's Sollers Group and Fiat have announced the creation of new a global alliance for the production of passenger cars and SUVs in Russia. Implementation of the project, which also could involve the Chrysler group, will create the second-largest domestic player in the Russian car market, behind Avtovaz.
The new joint venture will be located in Naberezhnye Chelny, Tatarstan, and at the initial stage will produce up to 100,000 cars per year. By 2016, the planned capacity of the plant will amount to 500,000 vehicles per year.
The partners will produce up to nine new models in the most popular classes in Russia (C, D, SUV, crossover), with six of them based on a new Fiat-Chrysler global platform. One such model will be the budget-priced Fiat Linea sedan, whose official launch is scheduled for later this year. Prices for the new cars will range from $7,000-$15,000. The new venture may also assemble Jeep vehicles.
The Fiat-Sollers joint venture was established on a 50:50 basis. According to the agreement, Fiat will provide the venture with intellectual property estimated at $200 million, including a new compact vehicle platform, while Sollers will provide assembly facilities in Naberezhnye Chelny, as well as facilities in the Nizhny Novgorod region for the production of engines and gearboxes.
The target level of localization in the joint venture is 50 percent, including the production of powertrains, as well as the establishment of an industrial park for the production of car components.
The total investment in the project, including R&D, is estimated at $3.3 billion. Most of the funds will be provided by the Russian government in the form of a 15-year loan. In addition, the government will provide a grant of $135 million to develop a new C-segment model.
Inside Line says: Russian industry observers believe that the new project has a good chance to succeed, although they expect it could take years for Fiat and Sollers to repay the government loans. — Evgeniy Vorotnikov, Correspondent
Add A Comment »