Russia's economics ministry said earlier Wednesday that an agreement on industrial car assembly by Europe's second largest carmaker in Russia might be signed by late October, and production could begin in 2008-9.
"Nizhny Novgorod is being viewed as the site," said Dmitry Levchenkov, deputy head of the investment policy department in the Ministry of Economic Development and Trade.
Media reports said last week that the French concern, which posted a net profit of $1.27 billion in 2005, was set to invest $250 million in the new plant in Russia.
Levchenkov of the economics ministry also said the company was not in talks with any other regions, including Moscow, the Moscow region or St. Petersburg.
The carmaker has not yet decided whether it would make cars using a Russian automotive plant GAZ already operating in Nizhny Novgorod or build its own, Levchenkov said.
The ministry's official also said that Peugeot cars, unlike other brands, could be assembled using other producers' equipment, which could reduce investment in new production lines.
Levchenkov also said the company would be the one to decide on the site and terms for car assembly, and an agreement with the ministry would not identify any places.
"It is their choice, and we are not pushing them anywhere," he said.
A government source said late last month that the French automaker was in talks with the Russian ministry on a draft investment agreement granting it tariff concessions on imports of assembly parts.
The document can only be signed after government agencies approve a draft deal on the car assembly plant between the ministry and the company, which the ministry expects to happen in early September.
David Rio, director for Eastern Europe and Mediterranean countries, said in Moscow last week that the company, which sold a total of 3.39 million cars in 2005, planned to increase sales in Russia 70% on 2005, to 16,000, because Russia was a strategic market for Peugeot. He said next year it could sell 20,000 or perhaps even 30,000 cars on the Russian market.
Rio said Peugeot would start selling its 207 and 206 sedans for $14,400 and $12,200 respectively in Russia by the end of the year.
Peugeot Citroen is the latest major foreign automaker to consider building an assembly plant in Russia.
U.S. Ford Motors currently assembles its cars in Vsevolozhsk, outside St. Petersburg, and General Motors, BMW and Kia have plants in the Kaliningrad Region, Russia's exclave on the Baltic Sea. Germany's Volkswagen and Japan's Nissan are also planning to launch production in Russia soon.
