Japan's Nissan Motor Co. Tuesday inaugurated its $200 million assembly plant in St. Petersburg, Russia, saying the opening of the plant in the economic downturn underlines its confidence in the potential of the Russian market.
At a ceremony attended by Russian Prime Minister Vladimir Putin, Nissan Chief Executive Carlos Ghosn said the new plant will be an important contributor to returning Nissan to sustainable growth and profitability.
The company said Russia was its number-one European market and the new plant would allow the company to better match supply and demand in the country.
The plant, which has the capacity to produce 50,000 vehicles a year, will start producing the Teana business-class Sedan this month and will produce the X-Trail sports utility vehicle from the autumn. It will initially employ 750 workers in a single shift.
Nissan said its total share of the Russian market stands at 5.7%
Auto sales were booming in Russia a year ago, particularly those of foreign-brand cars, which have been favored over Soviet-era domestic brands by Russians during recent years. That had prompted the likes of Toyota Motor Corp. (7203.TO), Ford Motor Co. (F) and Germany's Volkswagen AG (VOV.XE) to set up Russian assembly lines.
But since the credit crisis and reversal in oil prices delivered Russia a double whammy, auto sales have slumped, with 44% fewer units sold between January and April on year.
Still, Russia, along with China, is being seen as a key growth market for the world's automakers when a recovery starts.
Austrian-Candian auto-parts supplier Magna International (MGA), backed by financing from Moscow, earlier this week became preferred bidder to acquire General Motors Corp.'s (GM) European business, Adam Opel, and said ambitious expansion in Russia would be a key part of Opel's future strategy. GM already makes around one in every nine cars sold in Russia.
"This is Nissan's breakthrough in Russia," said Nissan's Ghosn. "The opening of our plant in St. Petersburg in the current conditions underlines our confidence in the high potential of the Russian economy."
