Toyota Motor Corp. said Tuesday that it would build a car assembly plant near St. Petersburg that will start operations in December 2007.
The carmaker announced its plans after reaching a basic agreement with the Russian government and the city of St. Petersburg.
"Toyota's decision was undoubtedly a significant event for the Russian economy ... and a sign that an attractive investment climate is developing in Russia," said German Gref, Russia's minister for economic development and trade, who signed the agreement along with St. Petersburg Governor Valentina Matviyenko.
The new plant, located in the town of Shushary, will produce approximately 50,000 automobiles a year, said Tokuichi Uranishi, Toyota's senior managing director for Europe and Africa operations.
"I am sure that our current initiative will be successful," Uranishi said. "Showing other companies the real success of Toyota, we hope to create a favorable climate for increased investment in the Russian economy, which will lead to Russia's economic growth, expansion of the automobile market and development of the auto industry in Russia."
Toyota said its initial investments in the plant would total 4 billion rubles (US$144 million, EUR 111 million). The European Bank for Reconstruction and Development will make an additional investment in the plant, which represents the largest investment yet in the St. Petersburg region, according to Gref.
The EBRD said in a statement that it would acquire a maximum 20 percent stake.
Uranishi said Toyota sold 47,000 cars in Russia last year, and that sales had increased by 30 percent so far in 2005.
At the start, the plant will produce the Camry model, one of the company's two best sellers in Russia. No decision has been made on what additional models will be assembled.
Russia has about 157 cars per 1,000 people, the EBRD said, putting it on par with Argentina, but far below the Polish average of 250.
IRINA TITOVA, Associated Press Writer