Mitsubishi Motors to unveil Russia plant plan-paper

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TOKYO, Nov 21 (Reuters) Japan's Mitsubishi Motors Corp will soon announce plans to build a factory in Russia, with production set to begin in 2010 with the Outlander sport utility vehicle, the Nikkei business daily reported on Wednesday.

The Japanese automaker is also finalising plans to have France's Peugeot SA, with which it has an operational tie-up, to take a stake in the local production company, the paper said, without citing sources.

Mitsubishi Motors signed a letter of intent with the Russian government last December to consider local assembly and has until late next month to make a decision to receive preferential financial terms.

President Osamu Masuko has said that while the Russian car market promised rapid expansion, it was unclear whether the automaker had the resources to set up a manufacturing footprint.

The carmaker returned to the black in the past business year for the first time in four years.

Mitsubishi Motors also has underutilised factories in Australia, Europe and to a lesser extent the United States, building the case against a new greenfield site among naysayers within the company, industry watchers say.

The Nikkei said the factory, most likely to be located in the St. Petersburg area, would cost about 20 billion yen (0 million). Output capacity would start at 20,000 to 30,000 vehicles a year, with the possible addition of the popular Lancer sedan.

Peugeot has a separate similar agreement with the Russian government for a possible factory. Last week, the automaker denied a Russian media report that it had selected a plant site to initially build 80,000 cars a year.

General Motors Corp, Ford Motor Co and Hyundai Motor Co all build cars in Russia, and Japan's Toyota Motor Corp, Nissan Motor Co and Suzuki Motor Corp are scheduled to follow.

Sales of foreign car brands in Russia, one of the world's fastest-growing car markets, surged 64 percent in the first 10 months of this year. Mitsubishi, ranked seventh in Russia, expects its sales to grow 43 percent to 100,000 in the business year to next March.

Shares of Mitsubishi Motors fell 1 percent in morning trade to 200 yen, outperforming a 1.8 percent fall in the transport sector subindex ITEQP.

REUTERS DKS BST0805

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