Italy's Fiat and Russia's Sollers today said they had abandoned a multi-billion-euro joint venture which had been hailed as a boon for the struggling Russian car industry.
'Fiat SpA and Sollers have now determined to pursue independent strategies to further develop their respective presence in Russia,' the companies said in a joint statement. 'To this end, both parties have consequently agreed to end their current negotiations aimed at enlarging their existing Russian activities,' they said.
Fiat and Sollers signed the joint venture agreement in February last year at a ceremony in the Russian city of Naberezhnye Chelny attended by Russian Prime Minister Vladimir Putin and Fiat head Sergio Marchionne.
The venture was expected to build up to 500,000 cars a year and lead to investments of €2.4 billion. A Fiat spokesman said on Friday that it would still produce 500,000 cars a year in Russia but 'alone', without adding further details.
The joint venture had represented the first major foreign investment in Russia's car industry since the global economic crisis triggered a collapse in demand on the country's once-booming car market.
Car sales in Russia dropped 49% in 2009 compared to 2008, according to the Association of European Business in Russia.
The deal was also in line with Fiat's push to increase its presence in emerging markets by forging alliances with local car makers.
