Peugeot Enters Talks With Russia’s ZIL on Possible Cooperation

PSA Peugeot Citroen, Europe’s second-biggest carmaker, confirmed it is talking with Russian manufacturer AMO ZIL about the possibility of cooperating as the French company plans to boost sales in the country.

“We’re in talks with them,” Jean-Baptiste Thomas, a Peugeot spokesman, said by phone. “But they’re just one among many interlocutors we’re talking to, in Russia and elsewhere,” Thomas said, declining to reveal more details of the talks.

Russian newspaper Vedomosti reported today that the talks are about the possibility of the companies assembling vehicles together. ZIL may start to assemble Peugeot and Citroen light commercial vehicles, Vedomosti reported, citing a person familiar with the matter.

As Peugeot is struggling with overcapacity and falling revenue in Europe, it plans to increase sales in emerging markets such as Russia. The Paris-based automaker, which reported a 576 million-euro ($749 million) operating loss for 2012, aims to sell more than 50 percent of its vehicles outside Europe by 2015.

The Russian car market is projected to surpass Germany in volume by 2017, researcher IHS Automotive said today. The prospects for the country prompted Renault SA, Volkswagen AG, Ford Motor Co. and other carmakers to expand capacity. General Motors Co. and Russian partner GAZ Group started ramping up production last month of 30,000 Chevrolet Aveos a year.