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. Last Updated: 07/27/2016

Peugeot to Pick Site for Plant Soon

bloombergFiat president Luca Cordero di Montezemolo in Frankfurt on Tuesday. Fiat and Severstal-Avto plan a joint venture.
FRANKFURT -- PSA Peugeot Citro--n, Europe's second-biggest carmaker, will decide soon on where to start production in Russia and whether to do so with a partner, CEO Christian Streiff told reporters Tuesday at a Frankfurt car show.

"The ambition is clear: We now sell several tens of thousands of cars in Russia and we want to go to 300,000, with 100,000 in a first phase," Streiff said.

"We are still considering three sites and looking whether to do it with partners or not," he said.

Streiff declined to name a possible partner, but media reports have said Mitsubishi could join in the production venture. Mitsubishi provides the platform for the Peugeot 407 and Citro--n C-Crosser sports utility vehicles.

He declined to comment on whether PSA was in talks with auto group AvtoVAZ about possible joint production.

Also speaking at the car show, Renault chief executive Carlos Ghosn said his company was in talks with AvtoVAZ, as the French carmaker seeks additional production capacity in the rapidly growing Russian market.

"As a car manufacturer, you want to make sure you're there. Not only with plant but also with the product," Ghosn said.

Russia is seen by analysts as one of the regions Renault must tap to reach its targets for sales growth and profitability.

Renault has already decided to extend Avtoframos, its existing production joint venture with the Moscow city government, but Ghosn said that was not enough.

"We are selling euro-zone cars in a dollar market, and with the dollar weak against the euro -- which is a trend we do not expect to change -- there is some urgency to produce cars locally," Ghosn said.

"That's why we entered discussions with AvtoVAZ. There is no conclusion yet, but we are still interested -- they have capacities available which would allow us to go much faster," he said.

Renault is also talking to other local producers and is considering setting up a site from scratch. But while Renault would be in total control if it built a greenfield factory in Russia, this would take time.

"We could save money but we will certainly save time," Ghosn said.

On Tuesday, GM Europe president Carl-Peter Forster told reporters that Russia was likely to become the biggest market for his company's Opel unit, overtaking Germany, where the division is based.

Opel sales in Russia have increased from about 20,000 vehicles to almost 70,000 in a few years and are continuing to grow, Forster said. Forster declined to say exactly when Opel's Russian sales might exceed those from Germany, where the unit sells about 300,000 vehicles annually.

Also Tuesday, Italian carmaker Fiat and Severstal-Avto announced that they had launched a commercial and industrial joint venture that will build on their existing accord under which the Russian company produces Fiat vehicles under license.

Fiat said each company would have 50 percent of the venture and Fiat would decide the product range. There will be a manufacturing plant where the new Fiat Linea will start production in the first quarter of 2008.

Reuters, Bloomberg