OREANDA-NEWS. February 22, 2011. Ford Motor Company [NYSE: F] and Sollers OJSC today signed a Memorandum of Understanding under which the parties intend to launch a new 50:50-owned joint venture called Ford Sollers for the production and distribution of Ford vehicles in Russia.

“We are delighted to be taking this next step for Ford in Russia with our proposed partner, Sollers,” said Stephen Odell, chairman and CEO, Ford of Europe.  “This is a great opportunity, and will provide Ford customers in Russia with more products and better service.

“The benefits provided by the proposed joint venture and the new Industrial Assembly policy will be key enablers to build the Ford brand in Russia and create a profitably growing business. It also will help to strengthen the Russian automotive industry and its local supply base,” Odell added.

“We are inspired by the opportunity to work with Ford,” said Vadim Shvetsov, general director of Sollers. “We are confident that our mutual efforts on the development of manufacturing facilities, new product launches and localization of parts content will ensure success for our strategy, and a leading position for the future joint venture company on the Russian market.”

The proposed joint venture will include Ford and Sollers local production facilities in Vsevolozhsk (St. Petersburg region) and in the Republic of Tatarstan, and will manufacture a range of Ford passenger cars and light commercial vehicles. 

In 2002, Ford became the first foreign auto manufacturer to start producing cars in Russia, and since then it has built a solid base in the country.  Ford brings to the proposed joint venture its manufacturing experience, an extensive existing dealer network, and a strong reputation among Russian customers as a brand that sells great products in the Russian market. The proposed joint venture will have access to the global range of Ford's latest products delivered under its One Ford plan.

Sollers, the second largest producer of passenger and light commercial vehicles in Russia, has considerable experience in the Russian automotive industry.  It will support the proposed joint venture through its manufacturing capabilities, knowledge of the Russian market, experience in distribution and working with the Russian supply base.  This significant contribution will strengthen the proposed joint venture strategy and be important for its future success. 

In addition to vehicle production, the Ford Sollers proposed joint venture will produce engines; operate a stamping facility that will provide a higher level of local parts content for Ford vehicles built in Russia; and establish research and development activities.  It also will be responsible for the import and distribution of Ford brand products, parts and accessories in Russia.

Ford Sollers is scheduled to start operations by the end of this year.  In order to benefit from the new Russian automotive policy framework, Ford and Sollers have made a joint application to the Russian government for participation in the new Industrial Assembly regime.