The Vedomosti newspaper quoted a government source as saying the company was in talks with the Russian Ministry of Economic Development and Trade on a draft investment agreement granting Peugeot tariff concessions on imports of assembly parts.
The company plans to finish construction by 2009, and will produce up to 80,000 of the popular Citroen C4 and Peugeot-307 annually. In 2005, the French automaker sold 2,930 Citroen C4s and 4,062 Peugeot-307s in Russia.
Peugeot is the latest major foreign automaker to consider construction of its own assembly plant in Russia. U.S. Ford Motors currently assembles its cars in Vsevolozhsk, outside St. Petersburg, and General Motors, BMW and Kia in Kaliningrad, Russia's exclave on the Baltic Sea.
Germany's Volkswagen and Japan's Nissan are also planning to launch production in Russia soon.
Peugeot Citroen is the second-largest carmaker in Europe. The company sold 3.39 million cars in 2005, earning a net profit of $1.27 billion.
