Mitsubishi Motors, Russia sign car assembly deal

TOKYO (Reuters) - Japan's Mitsubishi Motors Corp announced a long-awaited deal with the Russian government on Friday that would grant it financial incentives to assemble cars locally.

Mitsubishi Motors gave no other details, saying in a statement it was still studying the feasibility of making cars in Russia. It will make a separate announcement when it finalizes its plans, it said.

A source familiar with the matter told Reuters last week that Mitsubishi Motors would agree the deal with the intention of assembling cars locally by mid-2010.

Cooperation with France's PSA Peugeot Citroen is still under consideration, a Mitsubishi Motors spokesman in Tokyo said on Friday.

The French carmaker said on Thursday it had selected Kaluga, 180 km (110 miles) southwest of Moscow, as the site of its Russian factory. It made no mention of a partnership with Mitsubishi Motors.

The two carmakers have an operational tie-up under which the Japanese automaker builds 4X4 vehicles such as the C-Crosser and Peugeot 4007.

Mitsubishi Motors, ranked sixth in Russia, is banking on growth in the ballooning market to drive future expansion.

The agreement with Russia, called Decree 166, grants automakers incentives for establishing local production facilities, including customs duty relief or privileges for importing auto components.

Domestic rivals Toyota Motor Corp, Nissan Motor Co and Suzuki Motor Corp have all signed up for the deal.

(Reporting by Chang-Ran Kim; Editing by Mike Miller)