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GM sets deal to build Chevrolets in Poland

General Motors has clinched a deal to have Ukrainian automaker UkrAvto build entry-level Chevrolet cars for GM at a plant in Poland, a source close to the matter said.

"An announcement is imminent," the source said, asking to remain unidentified because the news had not yet been officially confirmed. The two companies have been in talks for months about forming a joint venture to make Chevrolets in Poland, but have now decided the FSO assembly plant will make Chevrolet small cars under contract for the time being, the source said. GM declined comment. The Automotive News Europe industry paper cited company sources as saying the plant will start making Aveo small cars in the fourth quarter of 2007, alleviating capacity restraints at the GM Daewoo Auto plant in South Korea that makes the model. Output in Poland would be less than 10,000 units in 2007, but annual production could hit 50,000 from 2008, the source said. GM the world's largest carmaker by volume, already cooperates with UkrAvto to make Chevrolets in Ukraine, so building up capacity in Poland is seen as a logical way to beef up European production of the brand rather than rely on imports. GM's labor force sees the move as a potential threat to jobs in western Europe, but GM has insisted production of Opel and Vauxhall models won't be shifted to eastern Europe. Still, GM has stressed that plants in western Europe need to be extremely productive to offset higher labor costs. (Reuters)