Toyota Unveils New Car Plant for Russian Market

The new St. Petersburg plant will build 20,000 Camrys annually.

Toyota inaugurated its first car assembly plant in Russia on Dec. 21 as the country's car market booms. Russian President Vladimir Putin and Toyota CEO Katsuaki Watanabe attended the opening of the Shushary plant in Saint Petersburg, which will assemble around 20,000 Toyota Camry vehicles a year.

Production at the $202.4 million plant is set to rise to 50,000 models within two years and could eventually rise to 300,000 vehicles with the construction of a second plant in the area, Watanabe said.

"There has been unprecedented growth in the Russian market. It has doubled in the last five years. We think the potential of the market is enormous," Watanabe said.

Russian Economic Development and Trade Minister Elvira Nabiullina said that the project would help bring new technology and management know-how for the Russian economy. Shushary is part of what Russian officials are calling "an automotive industry cluster" growing up in and around Saint Petersburg, where Ford already has a major production facility.

Russia is one of the biggest car markets in Europe and is expected by auto industry analysts to overtake Germany to become the largest within the next few years as the country's economy continues to boom. There are currently around 185 cars for 1,000 people in Russia. That figure in western European countries is between 400 and 600 and Russia is expected to make up the difference within a few years.

That prospect, as well as incentives from the Russian government, has brought a flood of foreign carmakers, mainly based around Saint Petersburg and in the southern region of Samara. Ford, General Motors, Renault and Volkswagen are among the foreign carmakers with plants in Russia. Nissan is building a new plant near Saint Petersburg and Hyundai has also announced plans to set up in the same region.

Analysts warn however that foreign companies face obstacles to expanding production because of a lack of highly-skilled personnel and the potential for protectionism from the authorities to promote domestic carmakers. The main loser of the foreign auto surge has been Avtovaz, producer of the infamous Lada and Russia's biggest car factory, which was built by Italy's Fiat in the 1970s in the Samara region in southern Russia. Avtovaz has a joint venture with General Motors that makes the Chevrolet Niva and earlier this month the ailing company unveiled a deal to sell French auto maker Renault a 25% stake.

Copyright Agence France-Presse, 2007

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