March 2, 2013 / 4:06 PM / in 5 years

Peugeot in talks on sharing production with Russia's ZIL

PARIS/MOSCOW, March 2 (Reuters) - French carmaker PSA Peugeot Citroen said it was in talks on sharing vehicle production with Russia’s ZIL, confirming a report in the newspaper Vedomosti.

“ZIL is part of a specific discussion we’re having about light commercial vehicles in Russia,” Peugeot spokesman Jean-Baptiste Thomas said on Saturday. “It’s just one discussion among many others, and nothing’s decided or concluded yet.”

Thomas declined further comment. He was speaking after Vedomosti reported that ZIL, a nearly century-old automaker once named after Stalin, may build light commercial vehicles under contract for Peugeot, citing a Russian auto industry source.

A ZIL official confirmed that the company was negotiating with Peugeot but gave no details, Vedomosti said.

The report on Friday also cited a source at a ZIL affiliate in Moscow as saying as saying ZIL was hoping to sign contracts with several companies, which the source did not name, by the end of the month.

Light commercial vehicles comprised 7.2 percent of the Russian market in 2012, or 188,095 vehicles, with GAZ selling nearly half of them, and is expected to remain at about the same level this year, Vedomosti said.

It cited an auto industry expert as saying that Peugeot’s investment was not likely to be large and that the potential partnership would be more beneficial for ZIL, which it said is operating below capacity. (Reporting by Laurence Frost and Steve Gutterman; editing by Ron Askew)

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