23 October 2003 01:50
VW in talks with Russia to construct factory for kit assembly AUTOMOTIVE:
Volkswagen is in discussions with the Russian government about the conditions under which it could set up a car factory in the country, with the German automobile manufacturer hopeful of a result within two months. The carmaker, which has made a number of aborted attempts to set up a factory making Skodas in Russia, wants to build a new plant making Volkswagen-brand models from imported kits. The renewed interest of Europe's largest carmaker is a sign of the appeal Russia holds for manufacturers keen to take advantage of an economy now solidly recovered from the 1998 government debt default. Ford opened a plant near St Petersburg last year while General Motors has formed an alliance with AvtoVAZ, the market leader. Other carmakers and suppliers have also been considering Russia, following the growth of car sales and manufacturing in eastern Europe. However, VW has told the Russian government that it will only invest if restrictions limiting imports of parts after three years are lifted. Detlef Wittig, head of sales for the VW brand, said: "We need to get rid of these regulations. We can only only hope that we will be able to come up with something positive in the next couple of months or so." VW sells about 10,000 imported cars a year in Russia, through 50 dealers. The market for new cars is above 1m units - only slightly smaller than China's - but most of the demand is for models far cheaper than anything a western manufacturer could produce. Mr Wittig said the company wanted to start slowly, with an investment in the double-digit million euros. "We want to have limited financial investment to see whether we could have the quality of work there that shows our cars are accepted in the market." VW has a mixed record in developing markets. It is trying to eliminate almost 4,000 jobs in Brazil, where it overinvested during the boom of the mid-1990s, but plans to spend an extra Euros 5bn (Dollars 5.9bn) expanding in China, where it is market leader in the world's fastest growing and most profitable car market. Mr Wittig also said VW would begin small numbers of exports from China to the east Asian region in order to test potential administrative or quality issues, but had no plans to begin exports in any significant scale.
[FTI [The Financial Times]] |
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