Fiat has abandoned plans to build a car plant in the central Russian city of Nizhny Novgorod and is considering the Caucasus or St Petersburg as alternative production sites according to the business daily, Kommersant.
The paper quoted market sources saying Russia’s top lender Sberbank, Fiat’s potential creditor, has proposed reviving the Derways plant plant in the Karachayevo-Cherkessia republic in the north Caucasus. Fiat wants to build the plant in St Petersburg, where Ford, Toyota, General Motors, and Nissan have already located Russian operations.
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Kommersant said Fiat gave up on the Nizhny Novgorod plan after failing to agree with Russian automaker GAZ Group, which has contracts with Volkswagen and GM.
Fiat signed a US$1bn agreement in late June with Russia’s Economic Development Ministry to produce 120,000 cars a year and construct an engine plant in the country.
Dmitry Levchenko, head of special economic zones and project finance department at the ministry, told the newspaper: “Fiat is considering various sites, including the north western region.”
Sberbank, GAZ Group and Fiat declined to comment.
