Canadian Manufacturing

Ford finalizes $1.4 billion Russia venture

The two companies have lined up $1.4 billion in long-term financing from the Russian development bank for the 50-50 joint venture called Ford Sollers.



DETROIT—Ford Motor Co. has struck a deal with Russian automaker Sollers to build and sell cars and other vehicles in Russia.

The two companies have lined up $1.4 billion in long-term financing from Vnesheconombank, the Russian development bank, for the 50-50 joint venture called Ford Sollers. Other financial details were not disclosed.

The venture, which includes one Ford plant and two Sollers factories, is should start operating later this year.

The venture’s operations will include a Ford factory near St. Petersburg that now builds the Focus compact and Mondeo midsize car. Also included are two Sollers factories in the Republic of Tatarstan.

The factories will make a variety of cars and commercial vehicles including the Ford Transit van.

Sollers, the second-biggest auto producer in Russia, will support the joint venture with its manufacturing operations, knowledge of the Russian market, and experience with distribution and Russian parts supply companies, Ford said.

Besides vehicle manufacturing, the joint venture will build engines and other parts for Ford vehicles, and it will import and distribute Ford vehicles.

Russia is expected to be one of the world’s fastest-growing auto markets and Ford told investors on Tuesday that it plans to increase global sales to 8 million by 2015, up 50 per cent from 5.3 million last year. Much of the sales growth was expected to be in Asia.

“Russia is set to become Europe’s largest market for new vehicles by mid-decade and provides the Ford brand with a huge growth opportunity,” Ford of Europe CEO Stephen Odell said in a statement.

Ford originally announced the deal in February and said the Russian government approved the venture on June 1. The deal comes after Italian automaker Fiat SpA backed out of a potential partnership with the same Russian company.

Ford began selling cars directly to Russians in 2002, and like many car makers is eager to expand business as demand improves.

While domestic auto companies in Russia have been struggling, the market itself has been gaining strength. Car sales in Russia rose by 30 per cent last year to 1.9 million, according to the Moscow-based Association of European Businesses.

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