Ford, Russian Partner Sollers Plan to Export Cars to Europe

Ford Motor Co. (F) and OAO Sollers aim to export cars and engines to Europe from their Russian venture in addition to domestic distribution, said Sollers Chief Executive Officer Vadim Shvetsov

“We have plans to produce engines in Russia, but it doesn’t make sense if the production is focused only on the Russian market,” Shvetsov told reporters today in Moscow.

Ford agreed to set up a 50-50 venture with Moscow-based Sollers to assemble and distribute vehicles in Russia, under a memorandum signed Feb. 18. The venture will manufacture Ford models at plants near St. Petersburg and in the Tatarstan region, east of Moscow. Sollers’s plant in Tatarstan can build 200,000 cars a year, while Ford’s near St. Petersburg can assemble 125,000 vehicles.

The venture will export even if the Russian market doubles to 4 million cars or $100 billion of sales by 2020, from about $50 billion this year, Shvetsov said. Ford and Sollers plan to set up the project by the end of the third quarter, he said.

Russia’s market for sales of new car and light commercial vehicles gained 30 percent last year to 1.9 million, according to the Association of European Businesses. The group said April 8 that it’s likely to raise its 2011 forecast of 2.24 million vehicles after meeting with members.

Second Biggest

Sollers, which surpassed billionaire Oleg Deripaska’s GAZ last year to become the second biggest Russian carmaker, dropped a planned partnership with Fiat to set up the venture with Ford.

“It was important for us to get not only an industrial alliance, but distribution as well,” Shvetsov said. “Ford offered such an opportunity.”

VEB, Russia’s state development bank, agreed to lend Ford and Sollers $1.4 billion for the project, Prime Minister Vladimir Putin said April 22.

“The primary objective” of the venture with Sollers is to help “build the Ford brand in Russia” and to provide customers with more products and improved services, John Gardiner, a Ford spokesman in Europe, said by e-mail.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

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