Daimler in talks to build Russian car plant

June 20, 2016

Germany’s Daimler is reported to be considering building its first passenger car plant in Russia, counting on the country’s troubled economy to recover in coming years. Stuttgart-based Daimler planes to spend around €200 million ($224 million) on the new site, where it aims to assemble as many as 30,000 sport-utility vehicles per year from imported kits, Germany’s business daily Handelsblatt reported, citing unnamed industry sources.

“We are in talks with the Russian government to verify whether the economic requirements for local car production are fulfilled,” a spokeswoman at Daimler said.

Russia’s volume car market has been in decline, faced with falling oil prices, weak currency and Western sanctions over the Ukraine crisis. However, sales of luxury cars are doing better than mass-market models as wealthy Russians invest in hard goods because of the weak currency. Analysts are reported to have said pent-up demand may cause the market to rebound in coming years.

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