VW's Kaluga Plant to Start This Year

Volkswagen will begin assembling cars in Kaluga in the third quarter of this year, the company's country director said Sunday.

"If this step is successful, if this step produces high-quality cars in Russia,'' Volkswagen may expand production, said Friedrich Lenz in a speech at the European Bank for Reconstruction and Development's annual meeting in Kazan.

Volkswagen last October began building a 370 million euro ($471 million) assembly plant in Kaluga. Volkswagen plans to assemble 50,000 vehicles in Kaluga this year and 115,000 vehicles at the factory annually in future years, Lenz said.

The carmaker chose Kaluga because of its proximity to Moscow and the Moscow region, which constitutes half of the country's car market, Lenz said. Kaluga is also located near convenient transport routes to Europe, he said.

Lenz said the car market might expand by more than 50 percent by 2016.