Fiat Partner Builds Plant in Russia

Sollers, who was previously known as Severstal-Avto, will build a new production facility in Russia to manufacturer commercial vehicles for several carmakers. Sollers, who is Fiat's Russian joint venture partner, will build the plant in the eastern city of Vladivostok, the Russian government announced, according to a report by Reuters.

Specifically, the company will build trucks for Isuzu Motors, SUVs for SsangYong Motor and the Ducato light commercial vehicle for its partner Fiat.

Prime Minister Vladimir Putin will visit Khabarovsk and will discuss with local officials the possibility of supporting Sollers' project in the region. It would require an investment of around 5.1 billion rubles (that's approximately $162.4 million) to build the factory by February 2010 and assemble around 15,000 cars per year.

Overall, the Russian market is still losing ground when compared to the other European auto markets. Truck manufacturer Kamaz announced it will halt production at its plant in St. Petersburg for the entire month of August due to collapsing demand for trucks. Additionally, AvtoVAZ, the largest carmaker in the country, will also suspend production in August, in a move supposed to lower inventories from 100,000 units to 80,000 units. According to media reports, current stocks total around 85,000 unsold cars.

Commenting on the current situation of the Russian auto industry, Renault's Chief Operating Officer Patrick Pelata said things are "just terrible", revealing that new car sales have fallen 50 percent compared to the 2008 figures.

"This isn't good news for the bottom line of Renault yet," he commented on the evolution of the Russian market.