KIA Begins Making Spectra Sedans in Russia

Monday, August 22nd 2005, 8:59 am

By: News On 6

MOSCOW (AP) _ South Korea's Kia Motors Corp. launched an assembly line producing its Spectra model at a Russian factory Monday, the Russian government said, marking the latest foray by a foreign automaker in a nation where more and more people are driving.

The Izhavto factory in the city of Izhevsk, about 1,000 kilometers (625 miles) east of Moscow, is assembling the mid-priced sedan and Kia has agreed to outsource welding and painting to local companies within 18 months, the Ministry of Industry and Energy said.

Kia has also agreed to cut imports of components by at least 30 percent in value terms in three stages over about five years, the ministry said.

Sales of the Izhevsk-produced Spectras are slated to begin in October, Izhavto said on its Web site.

Sputtering Russian carmakers are seeking foreign partners as Russians _ whose buying power has increased with the country's economic growth over the past five years _ turn away from poor-quality domestic autos. Foreign companies, meanwhile, are eyeing the Russian market.

Izhavto said it would be the fourth Russian plant to carry out full-scale production of foreign cars, after a Ford Motor Co. plant in Vsevolozhsk, a Hyundai Motor Co. plant in Taganrog and General Motors Corp.'s US$330 million joint venture with Russian giant Avtovaz in the city of Togliatti, which manufactures the Chevy-Niva sport utility vehicle.

Ford plans to roll out 28,000 units this year at its plant near St. Petersburg, while GM last week launched production of its Hummer off-road vehicle _ popular among rich Russians _ in a US$78 million project with the Avtotor company, which also manufactures cars for BMW and KIA in the Kaliningrad exclave.

Izhavto plans to make 8,000 Spectras this year, 25,000 next year and reach full capacity of 40,000 in 2008, the factory said. The price of cars will range from US$11,500 to US$14,500 (euro9,400 to euro11,850), the RIA-Novosti news agency reported.