PARIS -- French carmaker Renault on Wednesday said it plans to spend 230 million euros to build a new car model in Russia from 2005.
The new family saloon X90 model would be built at the factory of Renault's local unit Avtoframos, which will employ some 2,000 staff and should reach annual production of 60,000 vehicles after two or three years, the firm said in a statement.
Chairman Louis Schweitzer said earlier this month that Renault planned to build more cars in Russia to cash in on an "auto epidemic" there and offset sinking demand in western Europe.
The carmaker is aiming for annual sales volume -- including imports and the X90 -- of some 100,000 vehicles in the medium term in Russia, up from around 12,000 in 2002.
Renault, Europe's fourth biggest carmaker by sales, said the X90 was being developed in France and would be based on an existing platform shared by Renault and its Japanese partner Nissan, and used to make its top-selling Clio model.
"To position itself at the core of the market, where demand is for modern but economical vehicles, Renault is innovating by choosing Moscow for the production of its future X90 vehicle," Renault said in a statement.
Some 1.5 million vehicles were sold in Russia in 2002, with 900,000 of those also produced there, said Renault, adding the market was growing by around 10 percent per year.
Industry experts believe car sales will double within the next five years in central and eastern Europe, and Renault has already seized 18 percent of the market. The firm boosted sales in Russia by 47 percent in 2002 to some 8,000 cars.
CARS FOR TOUGH WEATHER
Renault said the X90 would be aimed at "countries where infrastructures still vary in quality and climatic conditions are often severe".
The car, to be competitively priced, would be the first model in a wider range of vehicles aimed at these countries. It would first be produced at the Renault's Dacia plant in Romania at the end of 2004 before production gets going in Russia in 2005.
The Avtoframos plant, 62 percent owned by Renault and 38 percent by the City of Moscow, currently makes around 10 Renault Clio cars per day, and will continue to make the top-selling model until the X90 comes into production.
Schweitzer is holding a joint news conference with Moscow mayor Yuri Luzhkov on Wednesday.
Renault, which also exports cars to Russia, has been mulling building cars in significant numbers in Moscow since the late 1980s. It scrapped an attempt by Avtovramos to assemble the popular Megane after the 1998 Russian economic crisis saw duties on the assembly kits imported by Renault soar.