After talks with Russian automaker Sollers collapsed in February, Fiat announced that it would go it alone to set up production ventures. At the time Sollers said that it was jilting Fiat to sign up instead to a new joint venture with the Ford Motor Company. Ambitious plans for the Fiat-Sollers joint venture (which had been announced on February 12, 2010 through an MoU) called for the production of 500,000 vehicles in Russia by 2016. The loans were to have been subsidised by the Russian government. That deal in fact came after a previous plan to acquire a minority stake in the country's largest automaker, Avtovaz, fell through when the Italian firm was outbid by its French rival, Renault.

However, despite these two setbacks, Fiat now has clear plans to take a slice of this key emerging market which showed the highest year-on-year global growth last year. Making it all official yesterday: "Fiat's investment will amount to US$1.1 billion," Dmitry Levchenkov, the head of the department of special economic zones at the Economy Ministry, was quoted by the Prime Tass news agency as saying, reported AP.

After the talks with Sollers ended on February 25, 2011, Fiat announced in a statement issued in Turin: "Fiat SpA announces that today it has submitted a Memorandum of Intent to the Ministry of Economic Development of the Russian Federation concerning a project for the localisation of production and distribution of passenger cars and commercial vehicles. The project envisages the establishment of manufacturing capacity for up to 300,000 vehicles per year, in accordance with the requirements of the new motor vehicles industrial assembly regulations established by the Russian Federation.

While Fiat is noted for a never ending stream of wild production targets, that 300,000 units per year (and 500,000 units per year proposed in the Sollers talks) has been pegged back to a more realistic 120,000 units, according to Dmitry Levchenkov, who confirmed that the factory, along with a new engine plant, will be located as expected in the industrial zone of Nizhny Novgorod.

The US$1.1 billion that Fiat will invest is part of a raft of US$5 billion in new investments by global auto industry groups in Russia, all agreed within the last three months, revealled Levchenkov. Sollers, which signed up to a joint venture with Ford to replace the proposed Fiat deal, will jointly invest around US$1.2 billion to build 300,000 vehicles a year, while Avtovaz, which Fiat also lost out on an alliance with when negotiations went in favour of Renault-Nissan, will invest US$2 billion to build 300,000 cars a year. Also joining the party is GM, which plans to invest US$1 billion, and Volkswagen, which will bring in US$900 million, added Levchenkov.

On announcing February's Memorandum of Understanding with the Russian government, Fiat said: "The product plan would be principally based on production of C and D segment cars, SUVs and light commercial vehicles. The Fiat and Jeep brands will be the mainstay of this project, which also envisages the distribution of a limited number of imported vehicles to complete the product range. This plan will be accompanied by a commitment to further expand and strengthen Fiat’s dealer network, which will also provide continuing support and service to all of its current customers."