A number of foreign companies, including giants such as America's Ford Motor Company, Germany's Volkswagen and Japan's Toyota, have in the past few years either opened or are planning to open plants in Russia.
"Our projects [on the industrial-scale assembly] will result in a production boom by 2010," German Gref told a meeting with parliamentarians. "We are expecting the output of [Russian-made foreign] cars to reach 500,000 in 2008, and rising to 800,000 in 2009."
With foreign automakers starting to produce moderately priced vehicles -- the Renault Logan, for example, retails at around a no frills $8,000 -- ordinary Russians are increasingly taking them out of the showroom in preference to similarly priced domestic models, which are not always seen as being wholly reliable.
"We will get Russian-made modern cars," Gref said. "Those [Russian] cars on the streets are killing machines and need to be modernized."
Russia has been pushing foreign carmakers to launch a complete production cycle, including welding and painting, in the country's car plants, a plan which experts say will allow Russia to localize 30% of the process and allow it to make 50% of a car's added value domestically.
According to industry and energy ministry figures for the first half of the year, Russian cars still led the market, with a 42.9% share (48% a year ago), followed by new foreign cars with 33.8% (26%), Russian-made foreign cars with 12% (9%), and used foreign cars with 11.3% (17%).
A total of 1.7 million cars were sold for $25 billion in Russia in 2005, and the first six months of 2006 saw a 15.6% year-on-year increase in sales and a solid trend line in favor of Russian-assembled foreign models.