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Mitsubishi, PSA to form Russia joint venture

TOKYO May 19, 2008; Reuters reported that Japan"s Mitsubishi and France"s PSA/Peugeot-Citroensaid today they will set up a joint venture in Russia to produce cars forthe three brands starting in 2011.

The factory in Kaluga, 180 km (110 miles) southwest of Moscow, willproduce midrange SUVs for the Mitsubishi, Peugeot and Citroen brands, aswell as midsize Peugeot and Citroen vehicles, with an overall capacity of160,000 vehicles.

Building work on the plant will start in June, with automobile production dueto begin in early 2011.

The two automakers had separate deals with Moscow granting themfinancial incentives to assemble cars in the country, and had said theywere open to joining hands with undisclosed partners.

PSA/Peugeot-Citroen, Europe"s second-biggest automaker, said in Januaryit was investing 300 million euros ($467 million) for the Kaluga factory,which it said would have annual capacity of 150,000 cars from 2010. PeugeotCitroen will own a majority stake, a Mitsubishi Motors spokesman said.

He said the partners would provide further details such as ownershipratios and Mitsubishi"s share of the investment at a later date, mostlikely at the plant"s groundbreaking ceremony scheduled for June 10.

The two automakers already have an operational tie-up under which theMitsubishi Motors builds 4X4 vehicles such as the C-Crosser and Peugeot4007.

Russia is expected to outstrip Germany as Europe"s biggest automobile market ina few years and has become a priority growth area for many globalautomakers.

Mitsubishi sold 107,000 Outlander SUVs, Lancer sedans and other cars inRussia in the business year ending on March 31, and is targeting a 31percent rise to 140,000 cars this year.

Peugeot Citroen wants to sell 100,000 cars in Russia by 2010.