Russia has become a hot new destination for the fast-growing Chinese overseas auto production market.

A slew of Chinese auto makers have plans to assemble vehicles in Russia using technologies and components mainly from China.

Nanjing Automobile Group, Fiat's partner in East China's Jiangsu Province, said its has clinched a US$200 million deal with a Russian company to produce light-duty trucks in the nation with the largest land mass.

The Nanjing auto group will build 40,000 own-brand light-duty trucks in Russia by 2010.

The move is China's biggest overseas vehicle production deal so far, said Zhong Dong, an official from Nanjing Automobile.

"We are likely to develop vehicles suitable to the Russian market with a joint Russian partner in the near future," Zhong told China Daily.

Chery Automobile, the rising car maker accused by General Motors of piracy, is expected to set up an assembly plant in Russia later this year, sources close to the company in Anhui Province said.

Chery will produce its Fengyun sedans and Tiggo sport utility vehicles (SUVs) in Russia with an annual manufacturing capacity of 6,500 units next year.

First Automotive Works Corp (FAW), China's top State-owned automaker, began assembling vehicles at an existing Russian plant last month.

Its production in Russia will reach 800 to 1,000 SUVs and pickups this year and up to 6,000 units next year.

"We will possibly invest to build a new plant in Russia," a FAW official said.

"Russia will become a springboard for us to enter the European market," the official said.

The feverish move to enter the Russian marketplace comes after Chinese automakers have already built assembly plants in Southeast Asia and the Middle East.

Chery started to produce its own vehicle brands in Iran at the end of last year.

Geely, China's biggest privately-owned car maker located in Zhejiang Province, clinched a deal with a Malaysian partner in May to make its cars in that Southeast Asian nation.

The Hong Kong-listed company's production in Malaysia will reach 30,000 units next year.

Brilliance China Auto, BMW's partner in Shenyang, Liaoning Province, signed an agreement with an Egyptian firm in April to produce its Zhonghua sedans in the African nation.

Production of Hong Kong-listed Brilliance will amount to 2,000 units this year in Egypt and will increase to 10,000 units in 2006.

Analysts said Russia has become a new target for Chinese automakers because it is a much bigger auto market than those countries in Southeast Asia and the Middle East.

"Russia's auto market has huge growth potential with its economic recovery," said Jia Xinguang of the China Automotive Industry Consulting and Development Corp.

"Chinese automakers are competitive in quality when compared with their Russian counterparts and in prices when compared with their Japanese and South Korean rivals," he said. "Therefore, they will be able to have a slice of the Russian auto market."

Russia's demand for new vehicles totals around 1 million units annually, according to FAW's market intelligence estimates.

Analysts said automobiles will give an extra boost to booming Sino-Russian trade.

During Chinese President Hu Jintao's four-day visit in Russia last week, the nations said they aimed to enhance bilateral trade volume to US$60-80 billion annually by 2010 from US$21 billion last year.

(China Daily July 5, 2005)