Avtotor forming JV with Magna to work under old industrial assembly rules - paper
MOSCOW. March 12 (Interfax) - The Avtotor group, a major Russian assembler of foreign car models, is forming a joint venture with Canada's Magna to work under the "old" rules of industrial assembly in order to retain customs breaks after 2016, Kommersant reported on Monday.
The venture will be set up at LLC Magna Nizhny Novgorod. Avtotor will own a 60% stake in the venture for which it paid 1 million euros.
The new company will enable Avtotor to produce various car models, including BMW, Kia, Hyundai, Chevrolet, Cadillac, Opel and Subaru, at its facilities in Kaliningrad.
Minimum production volumes will be increased from 25,000 to 350,000 vehicles.
Magna NN 2 is to be renamed LLC Avtotor-Magna Holding, the paper cited sources as saying. This firm will be the management company, while the operating company will be Automobile Fleet Kaliningrad, a firm being set up by Avtotor. Magna will prepare a feasibility study for the project, for which it will receive either 15 million euros or the opportunity to acquire 10% of the operating company.
The head of the automotive industry department at the Industry and Trade Ministry, Alexei Rakhmanov said the initiative to include Avtotor in the agreement with Magna will be supported only if the Kaliningrad plant begins assembling automobiles with intensive localization that meets the new requirements for industrial assembly.
Rakhmanov said the agreement will be valid for eight years, and after the middle of 2018, due to Russia's accession to the WTO, the cost of duties to 2020 will be compensated as for other companies working under industrial assembly rules, the paper said.