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Business news, 17.04.2005 15:49

Toyota, VW to Assemble Cars in Russia

VW to Assemble Cars in Russia The St. Petersburg authorities and Toyota Motor Corp., which was Russia's fourth biggest auto seller in the first quarter of 2005, may be weeks away from signing a memorandum of intention on assembling Toyotas on the outskirts of the city. At the same time, Volkswagen, which was seven places behind its Japanese rival in Q1, is intending to sign a similar document with the Moscow region next month, writes Vedomosti.

Svetlana Ganeyeva, a department chief with the Russian Economic Development and Trade Ministry, announced that Toyota would initially make 25,000 cars per year, but output might rise to 100,000 cars per year within two years. The terms, level of the investment, and the list of car models have not been made available. These issues are to be outlined later in an investment agreement.

St. Petersburg administration sources close to Toyota suggest the Japanese corporation could begin with the C-segment Toyota Corolla, which experts believe could be followed by the more expensive Camry (from $30,000) and Avensis (from $26 000). Analysts put the investment deal at $250 million to $400 million.

A Moscow region official said the regional government could sign an investment agreement with Volkswagen next month, under which the German carmaker will build a car factory there. Deputy Economic Development and Trade Minister Andrei Sharonov has confirmed these reports by saying VW was going to assemble its Bora, Pointer, and Skoda models at Stupino, not far from Moscow.

"At first the output will not be over 50,000 cars per year but later it might exceed 100,000 cars," the deputy minister said.

Analysts are optimistic about the future of Toyota and VW's projects on the growing Russian market. In a market expected to grow to 2.17 million cars by 2010 (while the forecast for 2005 is set at 1.57 million), global majors like Toyota and VW could not only undermine Russian giant AvtoVAZ, but also Ford's and Renault's aspirations. While the lowest price for a Corolla is currently $17,400, Toyota plans to reduce costs, as import tariffs for automotive components are to be lifted soon, which could get the price for Corolla down to $14,000 to $15,000, closer to the Ford Focus and Renault Logan

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