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Ford and Sollers form new JV in Russia; letter of intent for $1.4B in long term financing

Ford Motor Company and Sollers OJSC have signed agreements to establish a 50-50-owned joint venture in Russia. The new business, named Ford Sollers, is scheduled to start operations later this year. Ford and Sollers also signed a Letter of Intent with Vnesheconombank (VEB), the Russian development bank, for long-term financing for Ford Sollers of 39 billion Russian roubles, or approximately $1.4 billion.

The new joint venture also announced the Ford Transit medium commercial vehicle will be among several new Ford products to be built by Ford Sollers.

Russia is set to become Europe's largest market for new vehicles by mid-decade and provides the Ford brand a huge growth opportunity. Ford Sollers will help to build the Ford brand in Russia and support profitable growth, while also strengthening the Russian automotive industry and its local supply base.

—Stephen Odell, chairman and CEO of Ford of Europe

Ford Sollers operations will include the Ford manufacturing plant in Vsevolozhsk, near St. Petersburg, which currently builds the Ford Focus and Ford Mondeo, in addition to two Sollers production facilities in the Republic of Tatarstan. Together, these three plants will manufacture a range of Ford passenger cars and light commercial vehicles, including the Ford Transit commercial vehicle.

In 2002, Ford became the first foreign automaker to manufacture cars in Russia. Sollers, Russia’s second-largest producer of passenger and light commercial vehicles, will support Ford Sollers through its manufacturing capabilities, knowledge of the Russian market, experience in distribution and work with the Russian supply base.

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

The joint application by Ford and Sollers to the Russian government for participation in the new industrial assembly regime was approved by the Ministry of Economic Development and Trade on 1 June 2011. Ford Sollers will begin formal operation later this year.

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