Russian carmaker Avtotor Holding Ltd. and Magna International have announced full details of a cooperation agreement in Kaliningrad, Russia, to establish an automotive manufacturing cluster. Avtotor and Magna executives were joined by Russian government officials for the official signing of the agreement.

For Avtotor, this agreement marks the beginning of establishing a ‘full-cycle automobile manufacturing cluster’ in the Kaliningrad region. Once complete, it says the project is expected to combine new vehicle production factories and several new joint ventures for automotive components production.

Magna says it anticipates up to six full-cycle vehicle assembly operations for different automakers and that up to 15 automotive components production plants will be set up in Kaliningrad. The automotive components facilities will produce parts for Avtotor’s needs, and may also supply to other Russian automotive companies as well as export parts to other countries.

“Avtotor regards this project as a new effective model for cooperation between the participating international companies and automotive suppliers,” said Vladimir Scherbakov, Chairman of Avtotor. “In addition, we hope to contribute to a more rapid growth of bilateral trade, investments and the creation of new jobs in the Kaliningrad region.”

Magna will support Avtotor in the conceptual design and technical preparation of the automotive cluster and may possibly serve as partner for the localisation of the components production in the Kaliningrad region.

“Russia is an important automotive market with the potential to become the largest market in Europe,” said Guenther Apfalter, President Magna Steyr. “We look forward to working together with Avtotor to support the establishment of the automotive cluster in Kaliningrad.”

The final production capacity in the new cluster is expected to increase throughout several phases with the potential to reach up to 250,000 vehicles per year by 2018, with an annual product output expected of over 300 billion rubles (approximately US$10bn).