ST. PETERSBURG -- Toyota Motor Corp. unveiled plans on Tuesday for a Russian car plant that Moscow hopes will grow into a $1 billion investment.
Russian Economy Minister German Gref said Toyota would spend $250 million in the first two years and maybe more later.
"This project has the potential to exceed $1 billion," Gref told an investment conference in St. Petersburg, Russia's second largest city and close to the site of the new Toyota assembly plant.
In a statement sent after a ground-breaking ceremony attended by Russian President Vladimir Putin and former Japanese Prime Minister Yoshiro Mori, Toyota said initial investment in the 220-hectare plant would be around 15 billion yen ($137.3 million).
The plant is expected to create 500 new jobs and will begin producing 20,000 of Toyota's Camry sedan models a year from December 2007. Toyota said production would later expand to 50,000 cars a year.
Toyota is the world's second biggest automaker and last year sold 47,000 cars in Russia out of total foreign sales of 353,400.
Analysts have said rival carmakers, such as Nissan and DaimlerChrysler, could soon follow Toyota's example after Russia decided to eliminate import duties on car components earlier this year.
Gref said three other car makers were talking to Russia about possible investments, but declined to name them.
"The government has created all the right conditions for Toyota and other big players to come here," he said.
Russia's overall auto market grew to nearly 1.4 million vehicles last year from 1.21 million in 2003.
In the first quarter of 2005, Toyota was the fourth-largest foreign car brand, with 11,220 cars sold, up from 8,661 in January-March 2004.
Ford Motor Co. and Renault run plants in Russia, and others are set to follow as foreign car sales soared 80 percent in 2004 and are expected to rise 50 percent in 2005, spurred by rising household incomes.
The Kremlin has said DaimlerChrysler also plans to start assembling cars in Russia as soon as this year.