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. Last Updated: 07/27/2016

KamAZ Opens 3rd Foreign Factory

MTKamAZ said it will produce 200 trucks per year at the plant, but may expand capacity.
KamAZ will open its third plant abroad this month at a former repair shop for military equipment in Kiev, the No. 1 truckmaker said Tuesday.

The plant has already begun producing a few batches of trucks, KamAZ spokesman Fagim Viganshin said.

The plant, which is owned by the Ukrainian Defense Ministry, will eventually have a capacity of only 200 trucks per year, "but it's the principle of the matter that's important," he said.

"We're opening yet another foreign plant, and there is a possibility for expansion in the future," Viganshin said.

The trucks will be made under license from KamAZ, which already has one plant each in Kazakhstan and Azerbaijan.

Analysts said beginning production in Ukraine, even at such small numbers, was a good move for KamAZ.

"Ukraine knows how to protect its automakers, as it proved when it put tariffs up on AvtoVAZ cars this year," said Yelena Sakhnova, an analyst at United Financial Group.

No. 1 carmaker AvtoVAZ's sales fell 40 percent in Ukraine this summer when Kiev imposed a 32 percent import duty on some of the company's models. The duty has since been lifted.

"Having a production base in the country will protect KamAZ if the government ever raises tariffs on trucks," Sakhnova said.

"I really doubt they started production there to save on labor costs with such a small capacity," she added.

Ovanes Oganisian, an analyst at Renaissance Capital, said the plant was a good idea because KamAZ needs to strengthen its presence on the Ukrainian market.

KamAZ's board of directors also said Tuesday that they would meet Friday to decide whether to call an extraordinary general meeting to vote on a new board of directors.

KamAZ's board is also expected to discuss participation in the Belarussian-Russian BelRusAvto consortium.

The consortium so far includes

KamAZ and its main rival, Minsk Auto Plant, which have agreed to jointly develop diesel engines.

KamAZ is to launch production at its new diesel engine factory in December.