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Russia’s state development bank VTB ready to invest in joint venture between Sollers and Ford Motor Co.

CEO of Russia’s state development bank VEB, Vladimir Dmitriev, has said the bank may be ready to invest in a joint venture between a Russian and a US based auto maker. Speaking to journalists, the chief said VEB is ready to invest in the Sollers-Ford Motor Co. joint endeavor in Russia. However, Dmitriev clarified that VEB does not yet have a deal with the two auto makers.

Just recently,  Sollers said it had dropped a joint venture project with Italy’s Fiat S.p.A. and instead would team up with Ford as the U.S. car maker seeks to increase its presence in the booming Russian market.

According to Russian newspaper, Kommersant daily, Ford and Sollers plan to take out a 10-year loan for $1.2 billion, with two thirds of interest payments subsidized by the government. Boston Consulting Group said that Russia will be the sixth-largest global auto market by 2020 with annual sales of 4 million units, up from its current 10th position.

According to the consultancy, Russia may surpass Germany by 2018 as the largest market for passenger cars and light commercial vehicles in Europe. Sollers and Ford plan to build local production facilities in Vsevolozhsk in the St. Petersburg region and in Tatarstan to build Ford passenger cars and light commercial vehicles.

Stephen Odell, Ford of Europe’s CEO, said that the proposed joint venture will help build the Ford brand in Russia and create a profitably growing business, adding that the venture will help strengthen the Russian automotive industry and its local supply base.

Ford and Sollers said their joint venture will also produce engines and operate a stamping facility that will provide a higher level of local parts content for Ford vehicles built in Russia. It will also establish research and development activities. The joint venture is scheduled to start operations by the end of this year.

In 2010, Russia attracted 114.746 billion USD marking an increase of 40,1% to 2009. However, direct investments shrank by 13,2% in 2010 and made up 13.810 billion USD.  According to Russian Statistics Agency, as of late 2010, Russian economy accumulated 300,1 billion USD of foreign investments.

The top ten investors into Russia includes Cyprus(20,7%), the Netherlands (13,5%), Luxembourg 11,7%, China (9,3%), Germany (9,3%), Great Britain (7,2%), Ireland (3,8%), France (3,4%), Japan (3%) and Virgin Islands (2,5%). Meanwhile, Russia invested abroad about 96,2 billion USD (16,1% increase to 2009).

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