Ford to build small SUV in Russia for local market

FRANKFURT Tue May 14, 2013 2:53pm EDT

A Ford logo is seen on a car during a press preview at the 2013 New York International Auto Show in New York, March 28, 2013. REUTERS/Mike Segar

A Ford logo is seen on a car during a press preview at the 2013 New York International Auto Show in New York, March 28, 2013.

Credit: Reuters/Mike Segar

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FRANKFURT (Reuters) - Ford Sollers, the Russian joint venture of U.S. carmaker Ford Motor Co (F.N), will build the EcoSport in Russia next year, at a time when the market for small SUVs is gaining traction in the country, Ford officials said on Tuesday.

Ford Sollers broke ground on a $274 million powertrain plant in Russia on Tuesday. Ford is expected to employ 500 workers at the new factory, which will be located in Elabuga in the Russian republic of Tatarstan, where the venture already produces vehicles.

"The Russian market will be the largest in Europe in the coming years and represent an important growth opportunity," Ford Europe chief Stephen Odell said in a statement.

Production of the Ford EcoSport will start at one of the joint venture's two plants in Tatarstan during the second half of next year.

The move comes as demand for SUVs grows in Russia. The EcoSport will open Ford to a new range of consumers looking for a small SUV, Ted Cannis, head of the Ford Sollers, said.

Cannis said in an interview there are very few competitors in this segment and many other automakers import their SUVs to Russia, which increases prices. Building the EcoSport in Russia allows Ford to offer this vehicle at a lower price.

"This one, I can do blindfolded," said Cannis, who helped launch the first EcoSport in Brazil in 2003 when he led Ford's operations in Argentina. "This is easy math. This will be a massive success."

Formed in late 2011, the JV currently operates another vehicle assembly plant in Naberezhnye Chelny in Tatarstan as well as one in Vsevolozhsk near St. Petersburg.

In 18 months, Ford Sollers has advanced from building just two cars - the Focus and Mondeo - to seven, including the Galaxy, S-MAX, Transit, Kuga and Explorer.

The new powertrain plant will manufacture three different versions of the 1.6 liter Duratec engine from December 2015.

The engine plant will have an annual capacity of up to 105,000 units, with the possibility for further expansion to up to 200,000 engines a year. At least 30 per cent of Russian-built Ford vehicles will be equipped with these engines.

(Reporting by Christiaan Hetzner in Frankfurt and Deepa Seetharaman in Detroit; editing by Harro ten Wolde, David Cowell and Matthew Lewis)

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