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. Last Updated: 07/27/2016

Mitsubishi, Russia Signal Agreement on Car Factory

ST. PETERSBURG -- Japan's Mitsubishi Motors signed a memorandum of intent with Russia's government Friday to build a car assembly plant, a government official said.

"The memorandum sealed the intention to conduct a feasibility study and prepare a project of building a full-cycle [car plant] in Russia," the Economic Development and Trade Ministry official said.

"But if the company makes a [final] decision in the first half of 2007, an agreement on industrial assembly will be signed with it," the official said.

Japan's Nikkei business daily said earlier Friday that Mitsubishi -- Japan's only loss-making carmaker -- was considering building a plant in Russia with France's PSA Peugeot Citroen, with output set to begin as early as 2010.

However, both Peugeot and Mitsubishi denied that this was the case.

"At the end of August, we announced that we had decided to set ourselves up in Russia and were looking for the best solutions. As of today, no decision has been made but there is no project to build a plant with Mitsubishi," a Peugeot spokesman said.

St. Petersburg is often called "Russia's Detroit" by local media, comparing it to the U.S. automotive industry hub. International car companies, including Ford Motors, General Motors, Toyota and Nissan have already launched or are building car assembly output outside St. Petersburg.

Last month, a Russian government official said Mitsubishi planned to start assembling cars in northwestern Russia.

Mitsubishi has said it aims to improve sales and profits by expanding in markets such as Russia, where demand is strong for off-road vehicles, which are particularly profitable.