Video

Car makers look east to Russia SUBHEAD: INTRO: As the Russian car market continues to excite foreign investors, German car maker Volkswagen opens its first Russian plant. MOREINFO: The VW plant in Kaluga, near Moscow, will shortly be producing cars from kits. Foreign car makers have been rushing into Russia because of its buoyant sales and expanding middle class, with some predicting Russia will soon become Europe's second-biggest car market. Joanna Partridge reports for Reuters SCRIPT: Volkswagen becomes the latest auto giant to look east - as it opens its first Russian plant in Kaluga, around 200 kilometres southwest of Moscow. This factory opening comes as Europe's biggest car maker aims to triple its market share in Russia to 10 percent by 2010. This 1 billion euro plant in Kaluga will be producing cars from kits, starting with its Passat sedan and Skoda Octavia models. Output will be ramped up in 2009, when a second production line will start operating, creating a total of 5000 jobs. At the opening, Russia's Deputy Prime Minister welcomed the latest investment. SOUNDBITE: Sergei Naryshkin, Russian Deputy Prime Minister, saying (Russian): "It is a signal to other companies, both in and outside the car industry, that Russia has created long-term welcoming conditions for developing business, including foreign partners." With the Russian economy growing briskly and an expanding middle class - more Russians - and not just the super-rich - have a growing appetite for consumer goods like cars. And this interest has not gone unnoticed by foreign companies - including car makers like Ford. They've rushed into Russia despite some concern over the country's political future when President Putin steps down in March 2008. Car makers have been drawn by huge sales prospects, and GM Europe's CFO says Russia could soon be Europe's second-biggest car market after Germany: SOUNDBITE: Luca Maestri, CFO of GM Europe, saying (English): "The real engine of growth right now in Europe is Russia and we expect Russia to continue to grow next year. Most likely it's going to become the second largest market in Europe and we'll be driving some growth." As Volkswagen and other car makers face tough times in western Europe, with its saturated car markets, they are looking ever further east. That not only means major car firms can reduce costs, but the jobs they bring are good economic news for people in places like Kaluga. Joanna Partridge, Reuters COMPANIES MENTIONED: SYMBOLS: