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By Gleb Stolyarov
MOSCOW Feb 11 Italian carmaker Fiat SpA's
plan to assemble its Ducato van in Russia has been put
on hold due to a contractual dispute with its Russian partner,
two sources close to the matter said.
Many western carmakers have invested heavily in recent years
in Russia, which had been expected to overtake Germany as
Europe's biggest market, but Russian car and van sales have been
falling as the economy faltered and are expected to remain weak
Fiat and Mosavtozil, a joint venture between Russia's top
lender Sberbank and the city of Moscow to produce
light commercial vehicles (LCVs) at the Moscow government's
century-old vehicle maker Zil, signed a preliminary agreement to
assemble Fiat Ducatos last year, with a view to starting
production in the first quarter of 2014.
However, the start of production has been postponed after
the sides failed to agree final terms, the sources said. As a
result, a state invitation to tender for the supply of 500
million roubles ($14 million) worth of equipment needed to set
up production was cancelled last week, one of them added.
Igor Kulgan, head of Mosavtozil, confirmed the tender was
cancelled, referring to the lack of a legally-binding agreement
between Fiat and Mosavtozil.
Fiat declined to comment.
Sberbank had previously opened a 16 billion-rouble credit
line for Mosavtozil and a source at the bank said the lender
would still support the van project.
Mosavtozil secured preliminary agreements to assemble both
Fiat Ducatos and French group Renault's Master vans
Renault is still considering the project and has yet to make
a final decision, its Moscow-based representative said on
Previously Mosavtozil planned to assemble at least 40,000
LCVs a year at the Moscow site but Russia's LCV market fell by
3.4 percent to 179,727 vehicles last year.
Fiat, which unlike many western peers, including Renault,
does not have its own production in Russia, having failed to get
a foothold when the market was still growing, said Vladimir
Bespalov, an analyst at VTB Capital.
"Now is not the best moment to set up production - the sales
keep falling and competition is only increasing," he added.
Fiat's Russian sales fell by 7 percent last year to 8,000
cars and vehicles, which compared with a 5.5 percent fall in the
total market, putting it in 36th position in terms of sales
volumes, according to the Association of European Businesses.
($1=34.8117 Russian roubles)
(Additional reporting Maria Kiselyova; Writing by Maria
Kiselyova and Polina Devitt; Editing by David Goodman and Greg