Fiat May Delay Opening $1 Billion Russian Factory, Vyazalov Says

Fiat SpA (F) may delay building plant in St. Petersburg, Russia’s second-biggest city, because of overcapacity in Europe, said Sergey Vyazalov, the vice governor of city’s region.

The carmaker’s officials, who planned the 850 million-euro ($1 billion) facility with annual capacity of 120,000 units in 2013, haven’t contacted the regional administration for three months and haven’t presented an investment plan, said Vyazalov.

“The company has enough capacity in Europe to deliver cars to the Russian market,” he said. “So I expect it will delay the project for several years.”

The Italian carmaker keeps working on its strategy to expand in Russia as it’s defining details of the plan with Russian banks, Fiat Chief Executive Officer Sergio Marchionne told reporters on Sept. 28 in Paris.

“There is a boom in the market, we made the right choose to enter it with our Jeep brand,” said Marchionne. Italian car plants are running at 50 percent capacity, he said.

New car sales in Russia grew 15 percent to 1.9 million in the first eight months of this year from the same period a year earlier, according to the Association of European Business survey. Fiat brand sales dropped 74 percent to 5,054 as the Jeep brand sales tripled to 2,957 vehicles.

To contact the reporter on this story: Anatoly Temkin in St. Petersburg at atemkin@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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