Sollers distributes models from the Fiat and Lancia model ranges across Russia through its captive dealership network. Photos: Sollers shows the Fiat range at the Moscow Motor Show.

Fiat is set to announce a new joint venture with Russian auto manufacturer Sollers to produce Fiat branded cars, formalising a series of joint ventures already in place between the two companies. The Sollers factory in Naberezhniye Chelny already builds the Doblò light commercial van and Albea (the sedan from the Project World Car family) in small numbers and from this summer it will built the C-segment Linea. The joint venture, to be split equally, comes as Russian carmakers seek overseas expertise to revive the new car market which dramatically halved last year.

Within the last five years, Fiat has remade itself and during the crisis ended up as one of the strongest car companies,” Vladimir Vidulov a Moscow-based director of JATO Dynamics, a provider of automotive data and intelligence, says. “And due to the good relations of Russian prime Minister Putin and Italian premier Silvio Berlusconi the joint projects will be supported on a high level. The skill of Sollers at keeping good relations with the authorities and a sound management gives them a good chance.”

The news has also been confirmed by the Russian government ahead of a visit by Russian Prime Minister Vladimir Putin to the region this week which will include a visit to Sollers' plant in Naberezhniye Chelny, the second-largest city in the Russian Volga republic of Tatarstan, tomorrow. Fiat Group CEO Sergio Marchionne will also visit the city where the Sollers' factory has capacity to produce 80,000 cars a year on recently-installed production lines but currently only uses on a fraction of that availability.

Fiat and Sollers first started to work together in 2005. The two companies most recent deal came on December 30 when Putin officially opened Sollers newest automobile manufacturing factory in Vladivostok;  the plant is set to build an array of vehicles including several versions of the Fiat Ducato destined for public service use in the Far East of Russia. Fiat and Sollers have signed up to passenger car joint ventures in the past five years but there has been very little momentum so far. Sollers also distributes the Fiat and Lancia model ranges through its captive dealership network as well as having manufacturing alliances with SsangYong and Isuzu. Last month Russia's Industry and Trade Minister Viktor Khristenko commented that a new alliance with a foreign carmaker was imminent, with Russian industry insiders at the time pointing towards Fiat as being the most likely suspect.

The new deal between Fiat and Sollers comes after a dreadful 2009 for the country's new car market. Russian buyers stayed away from showrooms in large numbers during 2009, with sales volumes almost halving in 2009, according to JATO Dynamics. In line with sales forecasts, which suggested less than 1.5 million sales, every new car segment shrank over the year, with the top five brands – Lada, Chevrolet, Ford, Hyundai and Renault – all losing ground compared to their 2008 sales. Kia was the only high volume brand to show any improvement, increasing sales in most car sectors through its Rio, Sportage, Cerato, Carens, Picanto, Magentis, and new Soul models and posting a small second half sales gain in 2009.

Evangelos Hadjistavrou, Regional General Manager, JATO Dynamics, said: “The situation in Russia is very serious, perhaps the worst in any major market.  The market dropped by over 1.3 million vehicles last year, in contrast to the growth of recent times. The most interesting part is these losses could have been even greater, but for action by the Russian government.” Over the year, Russian authorities increased support loans to customers of any new Russian-built cars costing less than 600,000 RUR (13,500 euros). A further scrappage incentive has been announced for 2010, of 50,000 RUR (1,125 euros), in an attempt to arrest the decline.