Russians Enter the Bidding for Tritec Tooling

SAO PAULO – Not so fast China.

Reports surfaced last month that China’s Chongqing Lifan Industrial (Group) Co. Ltd. was close to a deal to purchase engine manufacturing tooling from Tritec Motors Ltda. a joint venture between DaimlerChrysler AG and BMW AG.

Tritec’s plant, located in Campo Largo, Parana, produces 1.4L to 1.6L inline 4-cyl. engines once used in Chrysler’s Neon small car and PT Cruiser sold in markets outside the U.S. The engines currently are offered in BMW’s Mini. At the time, the plant was heralded as the most-advanced engine factory ever built.

But word now is that Russia manufacturers OAO AvtoVAZ and OAO GAZ are interested in forming a consortium to purchase the factory.

Russian publication Kommersant says executives from the two companies will come to Brazil in April as part of a planned visit by Russian Prime Minister Mikhail Fradkov.

Original architectural sketch of Tritec plant.

The Russians may want to keep the factory in Campo Largo, although shipping the tooling to Russia has not been ruled out, a spokesman says.

Lifan has said it would transfer the tooling to its operations in China.

The plant represents a $500 million investment by DC and BMW. However, the JV expires in 2007, and BMW already has said it no longer will take engines from the facility, making its future uncertain beyond Jan. 1.

Tritec has capacity to produce 350,000 engines per year. Beyond the two JV partners, it makes engines for Lifan, First Auto Works and Chery Automobile Co. Ltd.

The independent Brazilian group Obvio plans to use Tritec engines for its Obvio car, scheduled to begin production near Rio de Janeiro in 2007.

Currently Tritec exports 100% of its production. Employment at the plant totals 460 workers.

In the 1990s, before poor quality performance diminished the Lada brand, AvtoVAZ sold cars and SUVs through 140 dealerships in Brazil.