Ford to Open Factory in Russia to Cut Car Prices

Ford Motor Co., the world’s No. 2 auto maker, will open a $150-million factory here next week in an effort to cut car prices that are inflated by import duties.

The factory will make 8,000 Ford Focus vehicles this year, with production rising to about 10,000 cars in 2003, said Oksana Khartonuk, a spokeswoman for Ford in Russia.

The move is a sign that Russian President Vladimir Putin’s efforts to attract foreign investors are starting to pay off as the country seeks to boost jobs and scrap Soviet-era factory technology, analysts said.

“This sends a signal that Russia is open for business,” said Roland Nash, head of research at Renaissance Capital in Moscow.

“When major companies are ready to invest in Russia, it is a sign that reforms have taken some effect.”

Producing vehicles locally will enable Ford to cut the price of cars to Russians by circumventing import duties, the company said. Import duties on cars brought into Russia total about 25%, compared with about 2.5% in European markets.

“Russia is a closed market and import duties are very high here,” Khartonuk said. A Ford Focus produced at the factory will cost about $10,900; the same car sells in Europe for about $13,900, she said.