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Mitsubishi Motors may build auto factory in Russia

Mitsubishi Motors Corp., Japan's sixth-largest carmaker, said it may build a factory in Russia to meet rising demand for cars and sport-utility vehicles.

Mitsubishi Motors Corp. is considering building a plant in Russia, said spokesman Kai Inada. It has not reached a decision, he said. A rising demand for autos in Russia is encouraging Toyota Motor Corp., Ford Motor Co. and other automakers to build their own factories in the country, as economic growth is fueling increased consumer spending.

The Company may build a ¥50 billion (€320 million) plant on the outskirts of St. Petersburg with France's PSA Peugeot Citroen, the Nikkei newspaper reported earlier today. Because of the costs of the proposed construction and the unpredictable politics of Russia, Mitsubishi Motors wanted to share the risk of a venture, Nikkei said. Inada denied that Tokyo-based Mitsubishi Motors will work with Peugeot in Russia.
The plant, which would have an annual capacity of 200,000 vehicles, could be operating by 2010, Nikkei said. Mitsubishi Motors's sales in Russia rose 25% to 69,000 units in 2006. The company needs sales of 80,000 to 100,000 vehicles to consider local production, President Osamu Masuko said in September.

The Russian economy grew 6.8% in the first 11 months of last year, the government said on January 11. Toyota, the world's second-biggest automaker, plans to open a plant in St. Petersburg in December 2007. Ford, the second-largest US automaker, will invest $250 million to more than double output and assemble additional models at its plant in Russia, the government said in August last year. Nissan Motor Co., Japan's second-largest automaker, also plans to open a vehicle assembly plant in the country in 2009. Shares of Mitsubishi Motors rose 1% to 198 yen as of 9:42 a.m. on the Tokyo Stock Exchange. (Bloomberg)