Ford's Russian assembly plant in Russia, based in the town of Vsevolozhsk in the Leningrad Region, plans to increase output 10% to 73,000 cars in 2007 and has won new tax breaks in place of ones lost earlier this year in a row with the authorities over producing car parts locally.

"The company plans to produce 60,000 cars (in Russia) in 2006 and expects a 10% increase to 73,000 cars in 2007," Ford Europe's vice president James Tetreault said during a meeting with Leningrad region governor Valery Serdyukov, according to the Prime-Tass news agency.

Vsevolozhsk currently produces Ford's European Focus but will add the Mondeo line in 2007 and Maverick SUVs soon after. In 2005, the plant assembled 39,774 cars and expects to increase this year's output to 60,000 units.

The new tax breaks mean "cars produced at the company's plant will not require customs clearance from now on," Ford said in a press release issued after signing an agreement with the economy ministry.

According to the agreement, cars assembled at the factory in St.Petersburg region will be treated as manufactured locally but Ford will still have to pay customs duties on some of the parts it imports. Under an earlier agreement Ford enjoyed tax breaks worth around $US700 per car provided 40% of the parts were manufactured in Russia.

But in June the authorities said the car maker did not reach the target and withdrew the breaks causing a brief halt to production. Ford said the company now exceeded the 40% target for locally-produced parts.

Since 15 June, Ford has paid 140,000 roubles ($5,222) in customs duties per car. A basic Focus costs around $11,700 in Russia, making it one of the most affordable and competitive cars on the market, Prime-Tass said.