PSA will sign Russia plant deal next week

Moscow -- PSA/Peugeot-Citroen is expected to sign an agreement to build a plant in Russia later this week.

The French automaker plans to open a car-assembly factory in Kaluga, 180km southwest of Moscow. Volkswagen opened a plant in Kaluga last November.

PSA says it will build medium-sized cars in Russia but has not specified which models.

Olga Efremova, PSA's Russian spokeswoman, said the company is still considering which cars to build in Kaluga but it is likely to produce the 308 lower-medium model.

PSA aims to open the Kaluga factory by 2010 -- by which date it hopes to sell 100 000 cars annually in Russia, up from an expected 45 000 this year and 24 951 last year.

PSA also will establish a financial services unit in Russia to help customers buy its cars.

The finance business will first work in partnership with a commercial bank, possibly its current partner BSVG, and will go it alone when it receives a licence from the Russian government.

From By ANNA SMOLCHENKO, AUTOMOTIVE NEWS EUROPE (A Crain publication)