Fiat plant in Russia to be ready in 9 months - senior official

MOSCOW, August 14 (RIA Novosti) - Severstal Auto (RTS: SVAV) and Italy's Fiat Group could construct a car plant in Russia by the beginning of next summer, the head of the Federal Agency for Special Economic Zones said Monday.

The agreement on a plant for the Fiat Ducato mini-van was concluded in July this year and the Russian automaker said production would be launched in late 2007 at a plant in Yelabuga, about 500 miles southeast of Moscow, with an annual design capacity of 75,000 cars. Fiat plans to sell the Ducato mainly overseas.

"The new plant could be constructed within nine months and it will not be a semi-knock down assembly because the localization of production will stand at over 50%," said Yury Zhdanov, who oversees new areas in the country that provide tax breaks and other benefits to companies in a bid to boost economic performance.

Severstal Auto and Fiat have obligations as residents of the special economic zone in Yelabuga to raise the level of Russian components in production of cars to 50% in seven to eight years. The current localization level is 30%.

Earlier this year, the two firms inked a license agreement to assemble Fiat's Albea, Palio and Doblo models from 2007 at a plant in Naberezhnye Chelny, which like Yelabuga is the Volga republic of Tatarstan. Under the deal, Severstal will also import and sell Fiats in Russia.

Severstal Auto's Ulyanovsk Automobile Plant [RTS: UAZA] is a leading manufacturer of off-roaders, light trucks and mini-vans. Last year Severstal reached an agreement with Korea's Ssangyong to assemble its cars in Russia.