Just the Facts:
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BMW is considering whether to launch full production of its cars in Russia with local partner Avtotor.
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Avtotor's Kaliningrad plant so far has been assembling BMW models from semi-knocked-down (SKD) kits.
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The initial phase of production, involving up to 55,000 cars a year, is targeted for 2014.
MOSCOW — BMW is considering whether to launch full production of its cars in Russia with local partner Avtotor, whose Kaliningrad plant so far has been assembling BMW models from semi-knocked-down (SKD) kits.
According to Alexander Sorokin, Avtotor's director of development, total capacity of the new production is expected to reach 80,000 cars per year. The first phase, to be launched in 2014, involves an initial capacity of 55,000 cars a year.
Up to $250 million will be invested in the project, part of which will come from BMW and Avtotor, and the rest from business loans.
According to sources close to the project, the final production capacity and volume of the new plant will largely depend on the level of support from the regional government, as a well special consideration from the Russian government.
If everything goes ahead, at the initial stage the plant will start production of BMW 3 and 5 Series, and later X1, X3 and X5. The establishment of full production is expected to help BMW to reduce prices for its cars in Russia by 10 percent.
Inside Line says: Russian analysts believe BMW could find it extremely difficult to sell in Russia as many cars as stated in the projected capacity of the new plant. According to the Association of European Businesses, in the first half of 2011, only 12,543 cars were sold by BMW in Russia, an increase of 29 percent from the same period a year ago.