29 Jun 2010 18:10

IzhAvto nears agreement to restart Hyundai, KIA auto assembly

IZHEVSK. June 29 (Interfax) - IzhAvto has nearly completed the paperwork on a resumption of car assembly operations, the president of Udmurtia, Alexander Volkov, is cited by his press center as saying.

IzhAvto has been shut down since May 2009.

The Russian Industry and Trade Ministry has expressed its willingness to conclude an additional agreement with IzhAvto and the Economic Development Ministry on assembly of Hyundai and KIA cars, the statement says.

"The issue of discount customs duties on component importation has not been discussed," it says.

Volkov also said he has great hopes for a project to assemble Avtovaz classic models. "This production will resume after preparatory work before the end of the third quarter of 2010. Talks with Avtovaz on resuming deliveries of kits are currently underway," the statement says.

It was reported earlier that Hyundai signed a memorandum of understanding with Udmurtia last April. Hyundai wants to produce 500,000 cars a year in Russia, while the facility in Izhevsk can be used to produce commercial vehicles.

The outside management at IzhAvto, Mikhail Kotov, reported that the company plans to reach agreement on assembly of the Avtovaz VAZ-2104 and VAZ-2107 models in Izhevsk by mid-July.

Bankruptcy proceeds were initiated in September 2009 and outside management was imposed for 18 months in March 2010.

IzhAvto had been producing the Kia Spectra and Sorento and the VAZ-2104 and vans based on Izh designs. The plant has capacity to produce 220,000 vehicles a year.