Ford Motor Company opened its first plant in Russia to produce cars for the domestic market last month, just as the Kremlin zeroed in on protecting the domestic industry.
The initial production run of a few thousand at the Vsevolozhsk plant, in the Leningrad region, will be boosted to 25,000 Ford Focus cars a year by 2007 if things go well. And if things go really well annual production could rise further to 100,000 units.
After a decade of standing on the sidelines, international car companies are beginning to take the plunge into the Russian market. Retail sales are booming as the average wage continues to rise relentlessly and car sales have been rising by 7% to 8% a year to reach the current 120 cars per thousand of the population - still low by international standards.
The Vsevolozhsk plant is typical of this foreign initiative in that it will start life assembling parts imported from western Europe. However, Ford hope to source half the inputs locally within five years and plans to pump $45 million into local suppliers to bring them up to scratch.
The Focus has a relatively modest $10,900 price tag and Ford estimate that it has some 300,000 potential customers.