Deal to Build Jeeps in Russia Nears Completion

Fiat SpA will finalize by year-end an agreement to erect a Jeep factory near St. Petersburg, Russia, Bloomberg News reports, citing anonymous sources.

The company signed a letter of intent in February to form a €850 million ($1.1 billion) joint venture with OAO Sberbank to begin making Jeeps in 2014.

A St. Petersburg official voiced concerns early this month that Fiat might postpone the venture because Europe's auto sales slump has left the company with excess production capacity in the region.

Fiat-Chrysler CEO Sergio Marchionne declared on Saturday that he remains interested in Russian expansion. He says the companies are working to complete the deal.

Fiat said in February that the St. Petersburg facility would have eventual capacity of 120,000 vehicles per year. The partners also plan to contract some SUV assembly to Russian truckmaker ZIL at its Moscow plant late next year.

Under the preliminary agreement, Fiat, which controls Jeep owner Chrysler Group, would take an 80% stake in the venture. The Russian bank would own the balance.