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. Last Updated: 07/27/2016

Volvo Begins Omsk Bus Production

Sweden's Volvo Group has begun producing the first of 109 buses it contracted to build in the city of Omsk, and is pushing forward with a $100 million investment to build post-sale servicing stations throughout Russia, company president and CEO Leif Johansson said Wednesday.

Johansson was in Moscow for talks with high-level officials which included discussions with city Deputy Mayor Valery Shantsev regarding the ZiL auto plant. He stressed, however, that the automaker was just one of many investment possibilities being studied by his firm.

"Russia now is in a phase of development where it is important [for an investor] to find out right on the spot how things are going," he said at a news conference.

Volvo, which manufactures cars, trucks, engines and construction equipment, is building buses in Omsk and has a preliminary agreement for a production line in the city of Pavlovsk. The latter agreement is due to be finalized by mid-June, said Andreas Puekker, sales manager for Volvo bus corporation.

Currently, however, the group is pressing ahead with building a network of 20 to 30 post-sale servicing sites throughout Russia, Johansson said. The $100 million project is about one-third finished, he said, and should be completed in the next two years.

The group is also "studying opportunities" for investing in production projects ranging from buses and trucks to construction equipment and heavy-duty engines, Johansson said.

Although no new agreements were signed, Johansson said he was encouraged after holding a series of meetings with high-level officials, including Deputy Prime Minister Boris Nemtsov.

One item of interest high on the agenda was a presidential decree allowing tax breaks for joint production projects in the auto industry which meet tough preconditions, such as a minimum $250 million investment by the foreign partner.

"To me, the decree looks both reasonable and attractive, but as always with this type of program, the issue is how to implement it," Johansson said.