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. Last Updated: 07/27/2016

New $200M Car Plant in the Works

bloombergChery QQ model cars, which resemble GM Daewoo's Matiz model, awaiting customers at an auto market in Beijing.
Private car assembly company Avtotor said Tuesday it was building a new $200 million assembly plant in Kaliningrad that will have an annual capacity of 150,000 vehicles.

Avtotor, which assembled over 16,000 cars at its existing plant last year, hopes to put the plant into production from 2007, Avtotor spokesman Vladimir Foshenko said by telephone.

A likely tenant for the new plant is Chinese carmaker Chery, Foshenko said, adding that Chery might also contribute to the cost of the new plant.

The companies' cooperation is likely to start as early as this year, when Avtotor begins making Chery models at its existing plant, he said. Avtotor already assembles models for carmakers including BMW and KIA. A final agreement between the companies will be signed in February, Foshenko said. Chery said the companies were in talks.

News of the new plant coincides with President Vladimir Putin's confirmation Tuesday that Russia was currently negotiating with 14 foreign carmakers to bring car production into the country.

Agreements had already been signed with six of the largest foreign makers, he said, according to information posted on the Kremlin web site. Commenting on a possible new automotive champion, an issue that has attracted a lot of recent media attention, Putin said a merger of AvtoVAZ, KamAZ and GAZ was "possible." The deal would be decided on by the companies' owners, he said. "If all the participants in this process come to the conclusion that such an alliance can help develop the Russian car industry, we will of course support such decisions. But we will not impose any decisions."

He said that state involvement at AvtoVAZ "wasn't bad" taking into consideration the carmaker's poor shape, but added that the state was not taking over the country's car industry.