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Magna seeks to double Russia sedan output
Magna International plans to double sedan output in Russia next year as North America's largest auto-parts maker seeks to capitalise on demand from the country's emerging middle class.
- Bloomberg
- Published: 23:39 June 8, 2008
St. Petersburg: Magna International plans to double sedan output in Russia next year as North America's largest auto-parts maker seeks to capitalise on demand from the country's emerging middle class while cutting jobs elsewhere.
The Canadian company, which also makes autos, aims to roll out as many as 150,000 vehicles based on Chrysler LLC's Sebring as part of a partnership with Russian billionaire Oleg Deripaska's GAZ, Co-Chief Executive Officer Siegfried Wolf said.
Magna is expanding in Russia as declining US auto sales lower demand for parts there. The company, which has a Russia production target this year of between 60,000 and 80,000 units, has spent "a couple of hundred million of dollars" in the country on ventures to supply automakers in St. Petersburg, Nizhny Novgorod and Kaluga near Moscow, Wolf said.
"Russia is a market where you see a growing middle class, and if you see a growing middle class you see as well that it needs cars in C segment and not cars on the very low end of the scale," Wolf said.
Aurora, Ontario-based Magna struck a partnership in May 2007 with Deripaska, who paid $1.54 billion for 20 million Class A shares in Magna, as Russia's economic expansion boosts income and demand for foreign cars.
"The North American market just in May in automotive was down 27 per cent. It's really a huge hit," Wolf said. The company expects to cut "a couple of percentages of our workforce" there, he said.
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