Chrysler Considers Assembling Jeeps at Russia’s TagAZ

VIENNA – Fiat, Chrysler and struggling Russian auto maker TagAZ reportedly are in negotiations about the contract assembly of Jeep vehicles.

The TagAZ plant is located in Taganrog, a port city in the Rostov region in southwestern Russia.

The auto maker filed for bankruptcy in April 2012. The Rostov regional arbitration court has ordered external control of TagAZ for 18 months and appointed a receiver last week.

A TagAZ official speaking during an arbitration-court hearing confirms negotiations about the assembly of the Jeep Grand Cherokee. He says representatives of the companies met Feb. 12 with the heads of Rostov’s administration, and Chrysler experts visited the TagAZ plant afterward to conduct a technical audit.

Svetlana Sagaydak, vice president of Sberbank Rossii, one of TagAZ’s largest creditors, also confirms negotiations with Chrysler to the Kommersant business daily. However, there is no final decision yet.

“Sberbank is interested in continuation of production at TagAZ,” Sagaydak is quoted as saying. The auto maker also is “considering the production of Chinese Chery cars for a transitional period.”

Original plans called for the construction of a plant in St. Petersburg with capacity to produce up to 120,000 Fiat and Jeep vehicles a year. The joint venture was to be owned 80% by Fiat and 20% by Sberbank.

That plan included contract assembly of cars, SUVs and commercial vehicles at MosAvtoZil, a 50-50 joint venture between Sberbank and the City of Moscow in Russia’s capital.

But the future of the St. Petersburg factory is unclear. An agreement was to be signed in June 2012, but there is no final contract yet.

TagAZ, mainly known as an assembler of Hyundai models in the past, now builds Chinese cars from complete-knocked-down kits sourced from BYD, Chery and JAC, plus commercial vehicles. Some of those vehicles are sold under TagAZ’s own Tagaz or Vortex brands. The auto maker delivered the first two units of its new Tagaz Aquila sports car to their buyers last week.

Last year TagAZ assembled 12,518 vehicles, including 10,672 cars and SUVs and 1,846 commercial vehicles, down 59% from 2011. In 2008, the auto maker produced more than 100,000 vehicles.

According to TagAZ’s receiver, 112 claims by creditors were received during the process of observation, of which 67 with a total amount of RR25.8 billion ($836 million) were included in the registry.