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. Last Updated: 07/27/2016

Toyota Suspends Plans for Truck-Building Factory

Toyota Motor Corp., the world's third-largest carmaker, said Tuesday that it was suspending plans to open a truck assembly plant in Russia until the political and economic situation becomes clearer.

"We're looking into the market for imported cars, Russian-made cars and waiting to see what will happen in the political and economic climate," said Dmitry Popov, a spokesman for Toyota at its representative office in Moscow.

The Japanese manufacturer had announced it would open a assembly line for Hiace trucks at a plant outside Moscow following a meeting between President Boris Yeltsin and Japanese Prime Minister Ryutaro Hashimoto in April 1998. Toyota had planned to produce 12,000 trucks a year.

Analysts said that even though Russia is a potentially huge market for carmakers, the collapse of the ruble last August and the political uncertainty that has followed has put the investment plans of foreign automakers on the back burner.

"Russia is the last great, untapped realm for car manufacturers. But even though per-capita car ownership is extremely low, the level of economic and political uncertainty is so high that it just isn't worth the risk of investing," said Kim Iskyan, a retail analyst with MFK Renaissance.

"No major auto company is willing to spend hundreds of millions of dollars on production here for very little chance of seeing any return," he said.

Italian car manufacturer Fiat in June put back plans for joint-venture production with Nizhny Novgorod carmaker GAZ until 2000, while Ford earlier this year froze a project to manufacture cars just outside St. Petersburg.

General Motors had planned for annual production of 150,000 vehicles in a joint venture with Russian carmaker AvtoVAZ, but it has been keeping mum on the progress of the project since March. AvtoVAZ is reported to be struggling to restructure a heavy debt burden.

French manufacturer Renault said in April that it would postpone plans for a $420 million investment after the Russian government refused to grant the company the customs breaks it had requested. But the company did begin as planned the assembly of Renault's Megane line at the Moskvich car plant. Some 2,000 cars are expected to roll off the line this year.

Other carmakers are undauntedly moving ahead with local investment projects. Germany's BMW has signed a 50 million Deutsche mark joint venture in Kaliningrad and Czech carmaker Skoda plans to produce 5,000 cars in Russia this year.

Toyota said Tuesday that it has not given up on the Russian market and is keeping a close eye on how the economic situation unfolds.

Sales of imported Toyotas in Russia have been low both before and after the crisis. Toyota sold 1,649 vehicles in Russia in the first three months of 1998, compared to 1,492 in the same period of this year, Popov said.