PSA Peugeot Citroën has signed a cooperation and investment agreement with the Kaluga regional government during a Moscow ceremony attended by the Russian Federation’s minister of economic development and trade.

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PSA said this agreement defines the conditions under which it will build a vehicle assembly plant in the city of Kaluga, 180 kilometres (about 110 miles) south-west of Moscow.


The new facility will be built on a 200-hectare site, of which 50 will be dedicated to a supplier park. Investment will total EUR300m and the assembly plant will have capacity of 150,000 units per year.


Now the deal is inked, PSA Peugeot Citroën expects to quickly begin construction, and hopes to have the cornerstone laid by the end of June.


The plant is scheduled to start building vehicles in 2010, building “medium size cars to meet the strong growth in demand for this segment, which accounts for 60% of cars sold in Russia,” according to a PSA statement.

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The automaker said Russia is one of its priority growth markets and it plans to sell 100,000 Peugeot and Citroën vehicles there in 2010, with a commitment to eventually raising this to 300,000 annually.


A London-based PSA spokesman declined to say which models would be built initially in Russia, adding that they would not necessarily be the group’s current mid-size models – the Peugeot 308 and Citroen C4.


“Those are the size of cars we will build,” he confirmed, saying that the automaker would give no more details at this stage.


Sedan body styles are more popular in the C-segment in Russia than the hatchbacks preferred by buyers in northern and western Europe, and the spokesman noted that PSA has developed a sedan derivative of the popular Citroen C4.


That car is built and sold in China (along with a Peugeot 307 sedan also now sold elsewhere) – and Argentina for sale there and in Brazil.


Graeme Roberts