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Ford Lands Big Deal in Russia – at Fiat’s Expense

Deal with Sollers could be major boost as former Soviet heartland's car market rebounds.

by on Feb.18, 2011

Sollers says "Da," to Ford, opening the door to an expanded presence in Russia.

Eager to expand sales in emerging markets, Ford Motor Co. has announced a 50/50 joint venture with Sollers, one of Russia’s leading automotive companies.

New of the proposed deal — which will involve the production and distribution of Ford passenger cars and light-duty commercial vehicles – followed shortly after Sollers announced it would not complete a partnership under negotiations with the Italian automaker, Fiat SpA.

“We are delighted to be taking this next step for Ford, in Russia, with our proposed partner, Sollers,” said Stephen Odell, chairman and CEO, Ford of Europe.

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“This is a great opportunity, and will provide Ford customers in Russia with more products and better service,” said Odell, adding “It also will help to strengthen the Russian automotive industry and its local supply base.”

In 2002, Ford became the first foreign auto manufacturer to start producing cars in Russia, and since then it has built a solid base in the country. But the joint venture with Sollers reflects a broader industry trend.

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Rubles for Clunkers

Russia struggles to revive its own auto market.

by on Mar.10, 2010

Sales have been slow at showrooms, like Moscow's Major mega-dealer, with a quick turnaround considered unlikely.

What was once among the world’s fastest-growing car markets has struggled to avert disaster in recent months.  Now, Russian authorities hope to turn things around by borrowing an idea that’s worked in a number of other markets, including the U.S., throwing money at it.

The Russian version dwarfs America’s Cash for Clunkers program, however, and could eventually involve the investment of $20 billion over a 10-year period, with an initial $6 billion meant to yank the market out of its deep recession.

As in the U.S., that money will be used to stilulate demand for new vehicles – which plunged 49% last year – and to get off the road as many of Russia’s smoke-belching Ladas and Vazs as possible.  But some of the money will also be used to train workers and to prop up the struggling home automaker, AvtoVaz, which still holds a 30% share of the market.

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Global News!

“Our end goal is to build a modern auto industry in Russia, including the entire production chain — from the steel sheet to the end product,” Prime Minister Vladimir Putin said, in a statement quoted by the Detroit Free Press.

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Daimler to Increase Stake in Russian Maker Kamaz

The Russians are on western technology shopping spree.

by on Feb.11, 2010

In back, Vladimir Putin, Prime Minister of the Russian Federation. (from left to right) Serguei Skvortsov, Managing Director, Troika Dialog, Andreas Renschler, Daimler Board of Management member responsible for Daimler Trucks & Daimler Buses, Serguei Chemezov, General Director of Rostechnologii State Corporation and Chairman of the Board of Directors of OJSC Kamaz, Serguei Kogogin, General Director of Kamaz.

In back, Vladimir Putin, Prime Minister of the Russian Federation. Seated left to right, Serguei Skvortsov, Managing Director, Troika Dialog, Andreas Renschler, Daimler Board of Management, Serguei Chemezov, General Director of Rostechnologii State Corporation and Chairman of the Board of Directors of OJSC Kamaz, Serguei Kogogin, General Director Kamaz.

Daimler AG and Russia’s largest  investment bank, Troika Dialog, have signed a memorandum of understanding to increase  Daimler’s stake in Russia’s largest truck manufacturer, Kamskiy avtomobilny zavod, by the acquisition of 5% of the Kamaz shares held by Troika Dialog.

The price of the transaction was not disclosed. Kamaz has about 50,000 employees and $1 billion in annual revenue.

The announcement came on the  same day as Fiat entered an agreement with Russian automaker Sollers to share technology and build as many as 500,000,  small cars and SUVs in eastern Russia.

Under this heavy duty truck plan, the European Bank for Reconstruction and Development (EBRD) would also  become a Kamaz shareholder.

If all the EU regulatory approvals are obtained, the Daimler and EBRD acquisitions would be made in parallel. No such regulatory impediment exists in Russia, as the presence of Vladimir Putin, Prime Minister of the Russian Federation, at the signing ceremony confirms.

The Germans, once again, head east.

Daimler AG will initially increase its holding in Kamaz by 1% to 11%. The remaining 4% of the deal would be bought by the EBRD. The EBRD would also get a seat on the Kamaz board of directors.

Daimler already has a seat on the Kamaz board, the result of a strategic partnership with Kamaz, Russian Technologies and Troika Dialog signed in December 2008.

Daimler acquired a 10% stake in Kamaz just as the global Great Recession took hold and the Russian  auto market collapsed to half its former size.

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Heavy Duty!

“The planned increase of our stakes in Kamaz is strengthening the strategic partnership of Daimler Trucks at KAMAZ,” said Andreas Renschler, Daimler Board of Management member responsible for Daimler Trucks and Daimler Buses.   (more…)

Fiat and Sollers Announce JV in Russia

More than $3 billion will be borrowed to produce cars and SUVs.

by on Feb.11, 2010

Exports to North America will be controversial, if it is part of the deal.

Fiat S.p.A. and Sollers announced in Naberezhnye Chelny, Russia, today the establishment of “global alliance,” which initially will include a joint venture for the production of passenger cars and sport utility vehicles.

Vadim Shvetsov, CEO of Sollers and Sergio Marchionne, CEO of FIAT Group, in the presence of Vladimir Putin, the Prime Minister of Russia, signed a memorandum of understanding. Ownership will be split 50%/50%.

Planned production capacity of the new JV will be 500,000 vehicles per year by 2016. Nine new models in the C and D segments and SUVs  will be marketed on the Russian market.

Fiat said up to six will be made from a new global compact  Fiat-Chrysler platform. Chrysler will receive some of the income for intellectual property rights and the sale of Jeep kits or components.

Sollers already assembles Fiat Albea cars and Ducato vans.

Sollers already assembles the Fiat Albea car and Ducato van, and has annual sales of about $2 billion.

At least 10% of the produced vehicles will be shipped to export markets.

It was not immediately clear if this  includes North America, where Canadian and U.S. taxpayers have bailed out Chrysler.

The Russian auto market has been hit unusually hard by the Great recession, with annual sales running at 1.4 million units, which is down more than 50%.

The factory will be located  in Naberezhnye Chelny, about 1,000 Km East of Moscow in the Republic of Tatarstan.

An existing Sollers production site will be expanded, and a technology park added for component production, including engines and transmissions.   (more…)