Mitsubishi, PSA to form Russia joint venture

TOKYO May 19, 2008; Reuters reported that Japan's Mitsubishi and France's PSA/Peugeot-Citroen said today they will set up a joint venture in Russia to produce cars for the three brands starting in 2011.

The factory in Kaluga, 180 km (110 miles) southwest of Moscow, will produce midrange SUVs for the Mitsubishi, Peugeot and Citroen brands, as well as midsize Peugeot and Citroen vehicles, with an overall capacity of 160,000 vehicles.

Building work on the plant will start in June, with car production due to begin in early 2011.

The two automakers had separate deals with Moscow granting them financial incentives to assemble cars in the country, and had said they were open to joining hands with undisclosed partners.

PSA/Peugeot-Citroen, Europe's second-biggest automaker, said in January it was investing 300 million euros ($467 million) for the Kaluga factory, which it said would have annual capacity of 150,000 cars from 2010. Peugeot Citroen will own a majority stake, a Mitsubishi Motors spokesman said.

He said the partners would provide further details such as ownership ratios and Mitsubishi's share of the investment at a later date, most likely at the plant's groundbreaking ceremony scheduled for June 10.

The two automakers already have an operational tie-up under which the Mitsubishi Motors builds 4X4 vehicles such as the C-Crosser and Peugeot 4007.

Russia is expected to outstrip Germany as Europe's biggest car market in a few years and has become a priority growth area for many global automakers.

Mitsubishi sold 107,000 Outlander SUVs, Lancer sedans and other cars in Russia in the business year ending on March 31, and is targeting a 31 percent rise to 140,000 cars this year.

Peugeot Citroen wants to sell 100,000 cars in Russia by 2010.