Russia's OAO GAZ Automaker to Produce DaimlerChrysler Cars

MOSCOW April 14, 2006; The AP reported that Russia's OAO GAZ automaker agreed to buy DaimlerChrysler AG production lines in suburban Detroit and move them to Russia, where it will produce DaimlerChrysler cars under license.

GAZ said in a statement Friday it will buy the production lines from the Sterling Heights plant in Michigan, which produces Chrysler Sebring and Dodge Stratus vehicles.

The Sterling Heights plant will get new equipment to build the company's next generation Sebring and Stratus, the Chrysler Group said, and will have the ability to produce a second, small-vehicle line as well.

GAZ said it will transfer the production equipment to the Russian city of Nizhny Novgorod, where the company is based. It did not disclose the price of the contract.

GAZ, which is owned by Russian financial-industrial group Basic Element, said it will produce 65,000 DaimlerChrysler cars annually.

GAZ and DaimlerChrysler also signed an exclusive long-term agreement under which GAZ will buy DaimlerChrysler-made engines produced in Mexico to be installed on GAZ's own passenger and commercial vehicles, GAZ said.

The Sebring and Stratus have been built at the Sterling Heights Assembly Plant since 2000.

Last year, DaimlerChrysler announced it was investing $278 million in the Sterling Heights plant, which employs about 2,400, for a flexible manufacturing operation to build vehicles in a leaner, more cost-effective way.

The Sterling Heights plant is still building cars and likely will wrap up production in May, Chrysler spokesman David Elshoff said Friday. The company hasn't announced a date for when it will reopen with the new equipment.