Nemak, an aluminium auto parts producing unit of Mexico’s Alfa conglomerate, based in Monterrey, is building a plant to supply Volkswagen in Russia.
The US$80m factory will supply aluminum heads and blocks for a new “high-tech” engine.
Initial capacity will be 600,000 units a year and production starts in 2015.
CEO Armando Tamez Martinez Nemak said: “The Russian automotive market represents a great opportunity for our company, given the strong expected increase in domestic car production.
“The Volkswagen Group is one of our most important customers worldwide.”
Russian legislation requires automakers to increase local content in their vehicles and industry analysts reckon this will lead to a 50% increase in engine production in the country.
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Russia is also expected become the largest automotive market in Europe by 2020, overtaking Germany.
Nemak has 34 plants in 14 countries in North America, South America, Europe and Asia.