Fiat's
inability to make ground in rapid growth developing
markets has once again played out as the planned 2.4
billion euro joint venture with Sollers has broken down
and instead the Russian carmaker has today announced a
new joint venture project with Ford.
The
Fiat-Sollers joint venture was announced almost exactly
a year ago (on February 12, 2010) and called for the
production of 500,000 vehicles in Russia by 2016. The
loans were to have been subsidised by the Russian
government. The deal in fact came after a previous plan
to acquire a stake in the country's largest automaker,
Avtovaz, fell through when the Italian firm was outbid
by its French rival, Renault. Last February a 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. At the signing Marchionne said:
"[The] 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.
According to the proposed plan nine new models, from C
and D segments as well as SUVs, would have been sold on
the Russian market with up to six being produced on a
new global Fiat-Chrysler platform while a minimum 10
percent of the produced vehicles would then be shipped
to export markets. Last December in an investor
presentation Fiat said it planned to sell 280,000
vehicles a year in Russia by 2014.
The Fiat/Sollers
project was set to implemented in Naberezhnye Chelny,
located 1,000 km east of Moscow in the Republic of
Tatarstan with the existing production site being
expanded by new production facilities and a technology
park for component production. "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," read the statement
issued by Fiat last February.
The
failure of the joint venture is also a setback in the
quest to reestablish a global footprint for the Chrysler
Group's Jeep and Chrysler divisions; both brands were
expected to prosper on this rapidly growing market.
Instead Ford and
Sollers have today signed a Memorandum of Understanding
under which they intend to launch a new 50:50 owned
joint venture called Ford Sollers for the production and
distribution of Ford vehicles in Russia.
"We are
delighted to be taking this next step for Ford in Russia
with our proposed partner, Sollers," said Stephen Odell,
chairman and CEO, Ford of Europe, today. "This is a
great opportunity, and will provide Ford customers in
Russia with more products and better service. The
benefits provided by the proposed joint venture and the
new Industrial Assembly policy will be key enablers to
build the Ford brand in Russia and create a profitably
growing business. It also will help to strengthen the
Russian automotive industry and its local supply base,"
Odell added.
"We are
inspired by the opportunity to work with Ford," Vadim
Shvetsov, general director of Sollers, also commented
after the announcement today. "We are confident that our
mutual efforts on the development of manufacturing
facilities, new product launches and localization of
parts content will ensure success for our strategy, and
a leading position for the future joint venture company
on the Russian market."
