Fiat has officially confirmed its new joint venture with Russian carmaker Sollers which will see the two companies embarking on 2.4 billion euros investment sponsored by the Russian government that will target production of 500,000 cars per year, the Italian firm issuing a detailed statement today.

"Fiat S.p.A. and Sollers have announced the establishment of global alliance in the format of a joint venture for the production of Passenger Cars and SUVs," read the statement issued by Fiat in Turin and also simultaneously by Chrysler Group in Detroit. "The Memorandum of Understanding was signed by Vadim Shvetsov, CEO of Sollers, and Sergio Marchionne, CEO of Fiat Group, in the presence of Vladimir Putin, the Prime Minister of Russia.

"The total production capacity of the new JV will be up to 500,000 vehicles per year by 2016. Nine new models (C and D segments, SUVs) will be marketed on the Russian market with up to six to be produced on a new global Fiat-Chrysler platform. A minimum 10 percent of the produced vehicles will be shipped to export markets. The Fiat/Sollers project will be implemented in Naberezhnye Chelny, located 1,000 Km East of Moscow in the Republic of Tatarstan. The Sollers-Naberezhnye Chelny plant production site will be expanded by new production facilities and a technology park for component production.

"Development and technical adaptation to the Russian market of the new vehicles will be carried out at the Engineering Technical Centre of the JV, with intellectual property rights for the platform to be contributed to the JV. Target localisation within the framework of the given project will reach no less than 50 percent, including the production of engines and gearboxes and the establishment of a new technology park for the production of components. Moreover, the required components will be produced at the production site of ZMZ and at the new technology park in Togliatti.

"Thus, the establishment of Fiat/Sollers JV in Russia will become one of the biggest investment projects in the Russian automotive sector and will include all key aspects of vehicle production with high added value. For implementation of the project the JV expects to get the support from the Russian Government in raising long-term loans at a favorable subsidised interest rate for the whole amount of the investments required, estimated at 2.4 billion euros," the statement concluded.

"The plans to implement a full-scale joint project reflect our confidence about the future development of the Russian automotive market," said Vadim Shvetsov, CEO of Sollers. "By establishing one of the global production centres specialising in the development and production of Fiat and Chrysler Group vehicles in Russia, we will be able to offer our customers the most desirable products in the most attractive passenger car segments and to occupy leading positions in the growing Russian market in forthcoming years," added Shvetsov.

For Sergio Marchionne, CEO of Fiat Group and Chrysler Group: "Today’s agreement marks a turning point for our presence on the Russian market. This is one of the largest alliances signed by our Group in one of the World’s most important markets. This partnership forms part of Fiat Group’s and Chrysler Group’s strategy of increased internationalisation which will allow us to also leverage our two Group’s know-how, expand our geographical footprint, increase customer choice and achieve cost benefits."