By James Marson
MOSCOW--Auto-parts giant Magna International Inc. (MGA) is the
latest company to tap into the growing auto market in Russia after
signing an agreement with Russian carmaker Avtotor Holding Ltd. to
develop an automobile manufacturing cluster in the Kaliningrad
region at a reported total cost of $3.2 billion.
Magna, which is listed in New York and Toronto, and its Russian
partner will set up as many as six full-cycle vehicle-assembly
operations for different automakers and up to 15 automotive
components production plants, the companies said in a joint
statement Friday.
The automotive components facilities will produce parts for
Avtotor's needs, and may also supply other Russian automotive firms
as well as export parts to other countries. The final production
capacity is expected to increase throughout several phases, with
the potential to reach up to 250,000 vehicles per year by 2018.
Russian media cited the chairman of Avtodor, Vladimir
Shcherbakov, as saying earlier this year that the project would
cost $3.2 billion. Kommersant and Vedomosti newspapers say Avtodor
will own 60% of the joint venture, with the rest controlled by
Magna. A spokeswoman for Magna declined to provide further details
of the deal. Avtotor could not be reached for further comment.
The Russian automobile market is a rare bright spot in Europe,
with sales expected to return to pre-crisis levels and approach 3
million cars this year. Russia is expected to surpass Germany as
Europe's largest auto market by 2014.
"Russia is an important automotive market with the potential to
become the largest market in Europe," said Guenther Apfalter,
president of Magna International Europe.
Magna will support Avtotor in the conceptual design and
technical preparation of the cluster and may serve as partner for
the localization of components production in the Kaliningrad
region, the companies said.
Write to James Marson at james.marson@dowjones.com
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