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. Last Updated: 07/27/2016

GM, Avtotor Ink Hummer Deal

MTAvtotor plans this year to sell 250 Hummer H2, which will sell for around $85,000.
Moscow's roads promise to get even more congested with the agreement Wednesday between General Motors and car assembly plant Avtotor to produce the massive Hummer H2 in Russia.

At a ceremony held at the 6th International Russian Motor Show, general director of GM in Russia, Heidi McCormack, and Avtotor's Chairman Vladimir Shcherbakov, announced the launch of a $50 million to $60 million production line at Avtotor's facility in Kaliningrad to begin production of the off-road vehicle at the end of September. So far, $250 million has been invested in the plant, which already assembles KIAs and BMWs.

The car, which costs up to $120,000 in the United States, will be sold for around $85,000 in its Russian incarnation, Shcherbakov said. The Indiana-made Hummer H1 can already be seen on Moscow streets, driven by some of the capital's most flamboyant citizens.

Avtotor plans to sell around 250 Hummer H2s this year, and around 500 annually starting next year. According to analysts, if GM positions the Hummer correctly, those goals are achievable.

"Five hundred vehicles is not a very big share of the market," said Andrei Kormilitsin, an analyst with Troika Dialog. "However, it would be hard to sell that many vehicles in Moscow alone, but if they offer to sell it as a semi-commercial vehicle to gangsters in the regions, it's possible to achieve those targets."

Expensive automobiles sell well in Russia, as the Bentley dealership in Moscow can attest, where prices start at $250,000 per car. Hordes of another off-road vehicle, the boxy Mercedes G-Class, can be seen in front of most of Moscow's upscale clubs.

While this will be the first time the Hummer is produced outside the United States, it is not GM's first venture into production on the Russian market. The company is already in partnership with the nation's No. 1 carmaker AvtoVAZ, producing the more moderately priced Chevrolet Niva. The $332 million plant launched operations last October and runs at a capacity of 35,000 cars per year.

Avtotor's Shcherbakov said there are plans to assemble other GM products in Kaliningrad, including Chevrolet brands, commercial trucks and engines, but provided no details.