Fiat, Russian Partners Postpone Signing of St. Petersburg Plant Contract

VIENNA – Fiat, its potential Russian joint-venture partner Sberbank Rossii and the government of St. Petersburg postpone the signing of an agreement to construct a car plant in the northern Russian city.

Following a letter of intent signed between Fiat and Sberbank in February, plans called for the signing of a final agreement at the St. Petersburg International Economic Forum that takes place June 21-23.

“The sides did not have enough time to agree on the contract. This is why it will not be signed at the forum,” a spokeswoman for the Committee for Investment and Strategic Projects of St. Petersburg tells local media.

No new deadline is mentioned for the contract signing.

It’s unclear whether the deferral is related to last week’s announcement by Fiat and Chrysler CEO Sergio Marchionne that the Italian auto maker will cut investment in Europe by about €500 million ($632 million) this year.

Additionally, Fiat is asking for additional incentives for the Russian project, Russia’s RBC Daily reports, quoting an unnamed source in the St. Petersburg administration.

Current plans call for the construction of a plant in the Pushkinsky districtfor production of up to 120,000 Fiat and Jeep vehicles annually. The facility would be owned 80% by Fiat and 20% by Sberbank.

The collaberation includes contract assembly of cars, SUVs and commercial vehicles at MosAvtoZil, a 50/50 JV to be created by Sberbank and the City of Moscow.