Mazda Motor to Build Automobile Plant in the Russian Far East

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Jun. 24 – Japan’s Mazda Motor Corp. plans to build a US$80 million automobile plant in the Russian Far East to meet demand for Asian brands in the region, economy ministry official Dmitry Levchenkov said yesterday according to Interfax.

“We have signed an agreement with Mazda under the old industrial assembly regime. Production will be launched in the Primorye Territory in the Far East,” said Dmitry Levchenkov, head of the ministry’s special economic zone department. He added that the plant will produce 25,000 to 50,000 vehicles per year. New assembly is planned to launch in the middle of 2012.

The ministry spokeswoman Svetlana Glikman told AFP the company will produce the Mazda 6 and a new model, which she declined to specify.

Mazda has no plans to produce engines in Russia, while 30 percent of other parts must be produced in the country under the old industrial assembly regime, Levchenkov said.

Under the new regime introduced in Russia in the spring, car producers setting up industrial assembly in Russia will have to build a minimum of 300,000 vehicles a year for several years after starting up, while companies which already assemble vehicles at their plants in Russia will have to increase their output to 350,000 a year.

The new terms also include a requirement that semi-knocked-down car production should not exceed 5 percent of output.

Over the past few years, Russia has encouraged foreign carmakers to set up shop in the country and all major automotive companies now have assembly plants in central Russia.

By contrast, Mazda is setting up production in the Primorye Region on the Pacific known for its fondness of Asian brands like Toyota and Nissan.

The Russian auto market is now showing signs of recovery after enduring a torrid slump during the Global Financial Crisis, with sales in 2009 plunging 49 percent.

Last year, Mazda’s sales in Russia fell 19 percent to 24,926 cars in a year due to the price rise. For example, the price of a Mazda 3 was raised to as much as US$35,700, which was scaring buyers away. However, from the beginning of this year, the Mazda sales began to grow.

Some experts estimate the tendency will proceed if the company will reduce the prices for cars when having started production in Russia.

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