Ford Motor Company and Russian automobile company Sollers OJSC signed a Memorandum of Understanding (MoU) under which the parties intend to launch a new 50:50-owned joint venture called Ford Sollers for the production and distribution of Ford vehicles in Russia. Sollers had originally planned a joint venture with Fiat.
The proposed JV is one of a number of new market expansions focused on the Russian car market, which the Boston Consulting Group this week said may become the world’s sixth-largest by 2020, selling 4 million cars a year.
The newly proposed joint venture will include Ford and Sollers local production facilities in Vsevolozhsk (St. Petersburg region) and in the Republic of Tatarstan, and will manufacture a range of Ford passenger cars and light commercial vehicles.
Ford began producing cars in Russia in 2002. Ford brings to the proposed joint venture its manufacturing experience, an existing dealer network, and its brand. The proposed joint venture will have access to the global range of Ford’s latest products delivered under its One Ford plan.
Sollers, the second largest producer of passenger and light commercial vehicles in Russia, has considerable experience in the Russian automotive industry. It will support the proposed joint venture through its manufacturing capabilities, knowledge of the Russian market, experience in distribution and working with the Russian supply base.
In addition to vehicle production, the Ford Sollers proposed joint venture will produce engines; operate a stamping facility that will provide a higher level of local parts content for Ford vehicles built in Russia; and establish research and development activities. It also will be responsible for the import and distribution of Ford brand products, parts and accessories in Russia.
Ford Sollers is scheduled to start operations by the end of this year. In order to benefit from the new Russian automotive policy framework, Ford and Sollers have made a joint application to the Russian government for participation in the new Industrial Assembly regime.
Other new and recent expansion activities focused on Russian include:
- A reported JV between Volkswagen and GAZ Group to produce 300,000 cars per year in Russia.
- GAZ Group signed an agreement with GM for the contract assembly of the new Chevrolet Aveo small car at GAZ’s facility in Nizhniy Novgorod. (Earlier post.)
- Daimler and GAZ signed a memorandum of understanding with the aim of producing Mercedes-Benz Sprinter vans in Russia. (Earlier post.)