Fiat May Finalize €760 Million Russia Investment Soon

Italy’s Fiat SpA will invest $1.1 billion (approx. €760 million) and build 120,000 cars a year in Russia to take advantage of state investment incentives and a recovering car industry, the Russian Economic Ministry has announced.

After talks with Russian automaker Sollers collapsed in February, Fiat announced that it would go it alone to set up production ventures and may finalize a deal with the Russian Economic Ministry this week, with plans to manufacture 120 thousand vehicles a year in the country. According to Dmitry Levchenkov, the ministry's senior official in charge of car assembly negotiations, Fiat plans to set up the factory, along with a new engine plant in the industrial zone of Nizhny Novgorod.

His comments suggest Fiat may have been able to broker a more lenient deal than rivals who have the advantage of a local manufacturer to act as a springboard for production.

Based on a framework set earlier this year, overseas carmakers would have to build around 350,000 cars a year in Russia, up from an earlier barrier of 25,000, in return for a scrapping of import tariffs on parts.