French automaker PSA Peugeot-Citroen and Mitsubishi Motors of Japan announced the creation Monday of a joint vehicle-producing company in Russia, described by Peugeot as part of a “major offensive” in the Russian market.
The assembly line at Kaluga, 180 kilometres (110 miles) southwest of Moscow, will turn out mid-range sport utility vehicles (SUVs) under the three brands and other mid-range vehicles for Peugeot and Citroen.
The factory would have initial capacity of 160,000 vehicles per year, equivalent to 5.0-6.0 percent of the Russian market, starting in 2011.
“In the long term, our goal in a second phase is to reach 300,000,” PSA Peugeot head Christian Streiff told reporters.
He said the company would be 70 percent controlled by Peugeot and 30 percent by Mitsubishi, with the value of Peugeot's investment put at 300 to 350 million euros (470-550 million dollars).
Peugeot will manage the factory and company but intends to integrate French, Japanese and Russian employees in senior positions, Streiff said.
The Kaluga factory is expected to employ 3,000 people.
Peugeot is planning a “major offensive in Russia,” Streiff said, describing the country as one of its “priority zones,” along with China and parts of Latin America.
He said Russia should “very quickly” become the leading auto market in Europe where annual sales could eclipse three million vehicles as early as next year.
Peugeot-Citroen controlled 1.7 percent of the Russian market in 2007, according to Streiff. In the first quarter of 2008, the Peugeot brand saw its sales double while Citroen is “getting settled,” with the establishment of a commercial network, he said.
