Volvo to Build Truck Assembly Facility in Russia

By: Glady Reign

As the Swedish company Volvo AG celebrates its 80h year in the auto industry, they are continuing their quest to increase their presence in different markets all over the world. Recently, the company announced that they will be building a plant in Russia that will produce Volvo trucks to be sold at the said country.

The company has allocated an investment of SEK 935 million for the said assembly plant. The new facility is planned so that it would meet the increasing demand for trucks in Russia and neighboring countries which were previously a part of the Soviet Union. The announcement also reported that the planned assembly plant will have an annual production capacity of 10,000 Volvo trucks and an additional 5,000 Renault trucks.

The site chosen for the new Russian plant is in the city of Kaluga which is found about 200 kilometers outside the country's capital. Talks between the company and the authorities in the Russian city are still ongoing. It is expected that the two parties will reach an agreement very soon and that by the year 2009, the assembly plant will be completed.

The new plant to be put up is a sign that the Russian market for trucks is growing. For the past two years, truck sales in the country have experienced a boom, posting almost a hundred percent improvement over the past couple of years. Volvo Trucks' sale in the country is also experiencing the same success. In fact, the company's success in the country is the direct cause why they have planned an assembly plant in Russia. Renault Trucks have also enjoyed much success in the country for the past years.

Aside from new trucks, the used truck market in Russia is also growing. Last year, approximately 500 used Volvo trucks were imported in Russia. But a strong economy is now allowing Russians to look for more new trucks and that is where the new assembly plant comes in. Not only in Russia is the demand for new trucks soaring, but the sale and demand for such a vehicle is spreading even in all of Western Europe. The truth is, the market for trucks continues to grow.

Currently, Volvo operates an assembly plant in Russia located in Zelenograd. The said facility has a meager production capacity of 500 trucks every year. Currently, the said plant is working on its maximum capacity producing Volvo trucks complete with . But the demand is increasing that the Zelenograd facility will not be able to cope with it.

Volvo's operation in the country started in 1937 when it became the first Western truck producer to deliver vehicles at the then Soviet Union. From that time on, Volvo's trucks have been continually increasing on Russia's roads. Today, it is estimated that there are about 31,000 Volvo trucks in Russia giving Volvo the biggest share in the Russian truck market.

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