Mitsubishi mulls car assembly in Russia

MOSCOW (Reuters) -- Mitsubishi Motors is considering plans to start assembling its cars in northwestern Russia, a Russian government official said on Thursday.

Mitshubishi Motors, Japan's only money-losing automaker, has said it aims to improve sales and profits in Europe by expanding in emerging markets such as Russia and Ukraine, where demand is strong for high-profit, off-road vehicles.

Asked which leading foreign automakers was now intending to open a plant in Russia, Dmitry Levchenko, investment department head at Russia's economy ministry, replied: "Talking of such large-scale players, Mitsubishi is diplaying interest."

He said the Japanese firm was "close to opting for Russia's northwest.

"This is quite logical, because this is where major producers of car components are concentrated."

Sales of new imported and locally assembled foreign cars have been booming in Russia amid its oil-fuelled economic growth and the consumer boom it brought.

President Vladimir Putin has said he believes Russia's annual car output, bolstered by major foreign producers, will double to some 2 million units annually in a few years.

Russia's second biggest city, St. Petersburg, has been fast emerging in the last few years as an important car industry hub, with analysts and officials alike calling it "a Russian Detroit", referring to the heart of the U.S. industry.

A St. Petersburg official said a Mitsubishi delegation had already held meetings with city authorities, but he said the Japanese firm had not made a final decision yet and was also studying other northwestern regions.

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