DaimlerChrysler won't join Avtovaz-Magna Russian plant

Reuters / December 7, 2006 - 9:00 am

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MOSCOW -- DaimlerChrysler AG denied a report today that it may join a project of Russia's largest carmaker Avtovaz and Canada's Magna International to build a $2 billion plant in Russia.

"DaimlerChrysler is currently not planning any car production in Russia within the framework of possible cooperation between Avtovaz and Magna in Russia," a spokesman for the world's fifth-biggest carmaker said.

Avtovaz and Magna, Canada's biggest auto parts maker, have been discussing a joint project to develop new models and build a plant for some time.

The Vedomosti newspaper quoted industry sources as saying the plant would cost up to $2.26 billion (1.7 billion euros) and would produce up to 480,000 cars a year in addition to Avtovaz's current output of 721,000 units.

The documents could be signed before the end of this year, while the plant could be built by 2010. The new plant would produce a new Lada model and a premium-class model of Daimler, it said.

Avtovaz, which already has a joint venture with General Motors, had named French carmakers Renault SA and PSA/Peugeot-Citroen among its potential partners.

Foreign carmakers are seeking to expand in Russia as car sales are booming due to people's rising income amid record high oil, gas and metals prices.