Peugeot-Citroen, Mitsubishi Announce Joint Production in Russia

The factory will have initial capacity of 160,000 vehicles per year, equivalent to 5%-6% of the Russian market.

PSA Peugeot-Citroen and Mitsubishi Motors of Japan anounced the creation on May 19 of a joint vehicle-producing company in Russia, described by Peugeot as part of a "major offensive" in the Russian market. The assembly line at Kaluga, 180 kilometers (110 miles) southwest of Moscow, will turn out mid-range sport utility vehicles (SUVs) under the three brands and other mid-range vehicles for Peugeot and Citroen.

The factory would have initial capacity of 160,000 vehicles per year, equivalent to 5%-6% of the Russian market, starting in 2011. The Kaluga factory is expected to employ 3,000 people.

"In the long term, our goal in a second phase is to reach 300,000," PSA Peugeot head Christian Streiff said. He said the company would be 70% controlled by Peugeot and 30% by Mitsubishi, with the value of Peugeot's investment put at 300 to 350 million euros (US$470-550 million).

Peugeot will manage the factory and company but intends to integrate French, Japanese and Russian employees in senior positions, Streiff said.

Peugeot is planning a "major offensive in Russia," Streiff said, describing the country as one of its "priority zones," along with China and parts of Latin America. He said Russia should "very quickly" become the leading auto market in Europe where annual sales could eclipse three million vehicles as early as next year. Peugeot-Citroen controlled 1.7% of the Russian market in 2007, according to Streiff. In the first quarter of 2008, the Peugeot brand saw its sales double while Citroen is "getting settled," with the establishment of a commercial network, he said.

Copyright Agence France-Presse, 2008

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