Putin Unveils Joint Car Venture with Mazda

Residents in the Far East have traditionally shunned clunky Russian models in favor of the Japanese brands, and the move to hike up the custom duties triggered protests in Vladivostok in 2008, with some calling for Putin's removal.

In order to cash in on the demand for Asian car brands in the Russian Far East, President Vladimir Putin unveiled Thursday a joint venture between  Mazda and Russian carmaker Sollers

Putin unveiled the $300 million joint venture based in the port city of Vladivostok as he gears up to host the annual APEC summit on the Russky Island near the city this weekend in a bid to showcase Russia's ambitions as a Pacific power.

The unveiling of the assembly line follows a controversial decision by Putin's government to increase tariffs on used cars from abroad, notably from nearby Japan, to shield Russian automakers from the economic crisis in 2008.

Residents in the Far East have traditionally shunned clunky Russian models in favor of the Japanese brands, and the move to hike up the custom duties triggered protests in Vladivostok in 2008, with some calling for Putin's removal.

The Kremlin had to send riot police from Moscow to break up those rallies. On Thursday, Putin said he was pleased Mazda had made a decision to set up shop in Russia's Far East.

"First and foremost, it's useful for those who live here. They are used to such vehicles, with the only difference being that they will be produced here," Putin said at the ceremony also attended by Japanese trade and industry minister Yukio Edano.

Sollers said that the joint venture will employ around 3,000 people and the amount of investment will stand at 10 billion rubles (US$309 million).

At first the joint venture will produce 50,000 vehicles a year, Sollers said, estimating total production capacity at 100,000 cars annually.

The venture equally owned by Mazda and Sollers will produce two models: the CX-5 crossover and the Mazda6 sedan.

The Kremlin has lured a number of Western and Asian carmakers to build assembly plants in western and central Russia. Mazda is the first Japanese automotive producer to set up production in the Russian Far East.

Toyota is also due to produce sports utility vehicles in Vladivostok in a joint venture with Sollers.

Putin had said in the past the government would not cancel its decision on tariffs, stressing it would rather pay to ship Russian-assembled cars to the Far East than see its residents buy Japanese-made models.

The Russian auto market has shown signs of recovery after enduring a torrid slump during the global economic crisis.

Copyright Agence France-Presse, 2012

TAGS: The Economy
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