Two Ukrainian automakers, Bogdan Corporation and Zaporozhsky Auto Plant (ZAZ), have started constructing a vehicle production plant in the town of Bor in the Nizhny Novgorod Region, the region's Governor Valery Shantsev told reporters Wednesday.

The project could cost up to $US600m, Shantsev said. Bogdan's investments in the project are expected to amount to $300m, the company told Prime-Tass news agency on Tuesday.

The two Ukrainian companies have set up a Russian subsidiary called United Transportation Technologies to carry out the project.

The production capacity of the plant will be 160,000 cars, 80,000 diesel engines for mid-size trucks and busses, 6,000 Isuzu buses, and 8,000 bus chassis.

The plant is expected to annually produce 25,000 Chevrolet Lanos cars, 25,000 trucks and 6,000 buses, Alexander Kiselyov, head of the Bor district administration, told Prime-Tass last month. The plant is to be built by 2010, he added.

Bogdan Corporation, the auto division of Ukraine's Ukrprominvest group, comprises 20 companies, including Cherkassky Autobus, the Lutsk Automobile Plant (LuAZ), Hyundai Motors Ukraine, and Kia Motors Ukraine.

ZAZ includes two car production plants and 10 components producers.