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. Last Updated: 07/27/2016

Yeltsin Backs Proposal for Car Factory

The All-Russian Auto Alliance, a consortium led by AvtoVAZ, maker of the popular Zhiguli sedan, has won key backing from President Boris Yeltsin for its project to build a new $3 billion automobile plant, Interfax reported.

The factory, which would produce about 300,000 sub-compact cars annually by the year 2000, is one of a handful of Russian projects aimed at expanding the country's industrial potential. U.S. automaker General Motors is studying the feasibility of investing in the plant.

Yeltsin's backing is significant because the alliance hopes to win more state tariff protection to help its venture survive competition from imports.

The alliance began a public share offering last month to raise $1.5 billion for the new plant, to be built in AvtoVAZ's home town of Togliatti. Aiming to pay dividends by 1995, the consortium plans to boost annual production of its popular 2106 model by 100,000.

According to a report in Moskovskiye Novosti, the consortium also plans to produce 5,000 new VAZ-2110 cars in Togliatti by the end of 1994, with mass production beginning in 1996.