Italy’s Fiat and Russian auto maker Sollers will invest 2.4 billion euros (3.3 billion dollars) in a new joint venture to produce cars in Russia, the Russian government said Wednesday.

“With this project a second major player is created on the Russian passenger car market,” after Russia’s largest carmaker Avtovaz, the government said in a statement.

The deal to produce up to 500,000 cars per year is to be inked on Thursday, when Russian Prime Minister Vladimir Putin visits Sollers’s plant in Naberezhnye Chelny, where Fiat Albea and Doblo models are already built.

Fiat chief executive Sergio Marchionne is also set to attend the event in the southwestern Russian republic of Tartastan.

The joint venture represents the first major foreign capital in the Russian car market since the global financial crisis triggered a collapse in demand.

Russia had once promised to have the world’s fastest growing auto sector, but car sales dropped by 49 percent last year compared to 2008.

Citing an official and a banking source, daily Kommersant said Tuesday that the Naberezhnye Chelny factory would now start producing the Fiat Linea and stop making jeeps for troubled South Korean car maker SsongYang.

Fiat and Sollers have been partners since 2005, but the Italian auto giant has a long history of business in Russia.

The sprawling Avtovaz factory in Tolyatti was designed by Fiat in 1970s and its iconic cars such as the Lada and the Niva, which once dominated the Soviet auto industry, were modeled after the Italian carmaker’s 1960s models.