Sollers Group and Fiat signed an agreement to create a joint venture.
Prime Minister Vladimir Putin arrived in Naberezhnye Chelny on Thursday. Visiting the Sollers Plant which produces Italian Fiats, the Prime Minister was shown a spic-and-span new workshop in which the plant's products were displayed: they included the main commercial Fiat Albea model, the Fiat Panorama which is assembled here and the future Linea model for which the production line is being installed.
The Prime Minister's guide was the Director General of Sollers, Vadim Shvetsov. Putin, accompanied by the outgoing President of Tatarstan Mintimer Shaimiyev and Trade and Industry Minister Viktor Khristenko walked along the robotised line on which zinc-plated but still unpainted body parts were moving.
After completing the review, the participants passed on to the main part. Shvetsov and Fiat managing director Sergio Marchionne signed a memorandum on the creation of a joint venture (JV) in the presence of Vladimir Putin. It will be created on a parity basis, with the Italians contributing 150 million euro worth of technology, including a new Compact White platform, and Sollers 150 million euros worth of assets: a plant in Naberezhnye Chelny and the production capacity of the Zavolzhsky Motor Plant.
The organisers of the JV announced in advance the amount of government support they were counting on: a 2.1 billion euro loan for a term of up to 15 years with a subsidised interest rate; and a 100 million euro government grant for the development of a new C class car.
Luckily, Putin was accompanied by the head of VEB Vladimir Dmitriyev and President of VTB Andrei Kostin, which proved to be useful. After a brief conference Vladimir Putin said the government would consider granting the 2.1 billion euro loan the JV sought.
"We have agreed to include both the Italian and the Russian parties into the project. The Russian government will consider lending the project the sum of 2.1 billion euros. The issue needs to be studied by the lending institutions," Putin said.
The government was ready "to offer its shoulder to support the joint project and to bring in major state-owned banks", he said, especially since "we are looking at the creation of new production: 1 billion euros will be spent to purchase the equipment, of which 600 million will be Italian".
Sollers currently uses mainly Turkish components to assemble its cars. The workers told our correspondent that many of them had been in Turkey for internships, and that the quality of Russian assembly was at least as good as in Turkey. "Our people are more diligent than the Turks. We haven't had a single complaint in two years," a mechanic in the chassis assembly workshop told Gazeta.
Another and apparently more experienced worker said car quality depends on components and not on assembly. "Why didn't our Oka fly? Because the bodies were of inferior quality. The quality was inferior because the government had neglected it. So, the government is to blame for everything," the worker said with an air of authority.
Nobody at the plant grumbles about low pay, which is less than 30,000 roubles a month. The workers say the sales of cars - the Linea, which is now priced 500,000-600,000 roubles, and the Albea, priced about 350,000 roubles - have fallen because of the crisis. Even in Naberezhnye Chelny people prefer to buy cheaper second-hand foreign cars aged three to five years.
Putin said during the brief conference that the government had supported Sollers last year. "We allocated 5.7 billion roubles for procurement to buy cars for government and municipal needs. Easy-term credits made it possible to sell 2,100 cars, and 1,200 cars were transported to the Far East by rail at a discount tariff," Putin said. Sollers reported 34.5 billion roubles in profits at the end of 2009.
Denis Telmanov