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GM and Nissan make Russian move

The Russian car market grew by over 14% in 2005
Car giant General Motors has begun construction of a new car plant in Russia, with rival Nissan set to build its own factory nearby.
The two plants near St Petersburg are part of a surge of Russian activity from world carmakers, eager to tap into a fast-developing market.

Consultants Ernst & Young claim the Russian car market grew by 14% last year to 1.8 million vehicles.

Toyota, Renault and Kia Motors all launched Russian plants in 2005.

Growth market

GM's $115m plant will produce the Chevrolet Captiva sports utility vehicles and a yet-to-be-named compact car from October 2008, with an annual capacity of 25,000.

It already has a $340m joint venture with Russian car company AvtoVaz, which has been running since 2001.

"With the addition of this new, wholly-owned facility, GM and its partners will be able to assemble more than 100,000 cars a year in Russia," said GM chief executive Rick Wagoner at the ground-breaking ceremony for the plant, which will employ 700 workers.

GM Europe president Carl-Peter Forster said the Russian car market was growing at 10-20%, compared to the 1-3% growth seen in mature western European markets.

The company said it sold 11,000 cars in Russia in May, up by 80% on the same period in 2005.