DaimlerChrysler May Build Plant in Russia

DaimlerChrysler AG may join a project of Russia’s largest carmaker Avtovaz and Canada’s Magna International to build a $2 billion plant in Russia, the Vedomosti business daily reported on Thursday.

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.

Vedomosti quoted industry sources as saying the plant would cost up to 1.7 billion euro ($2.26 billion) 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 sources said Daimler may join the project as a long-standing partner of Magna in other countries.

The new plant would produce a new Lada model and a premium-class model of Daimler.

Avtovaz, already in a joint venture with U.S. car giant General Motors, had named French car makers Renault 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.

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