Investment Opportunity in Armenia

BISNIS AUTOMOTIVE UPDATE
May 26, 2005

SECTOR TRADE LEAD:

1. Sportmotors, LLC: This Armenian company seeks to become a distributor
of U.S. manufacturers of automotive parts and accessories.
For more information, see

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MARKET ANNOUNCEMENTS:

Serious on entering the Russian market? The MIMS Autoshow in Moscow is
only 3 months away, and the US Foreign Commercial Service is gearing up
for a US pavilion at the show:

The U.S. Commercial Service in Russia will be supporting U.S. companies
at the Moscow International Motor Show 2005 (MIMS). With exhibitors from
30 countries and over 300,000 visitors, this show is the leading
automotive aftermarket industry event in Russia and the ideal venue to
connect with potential customers or partners. To promote your company’s
products, we are offering two cost-effective programs designed to meet
the needs of both new-to-market U.S. exporters and those already doing
business in Russia.

You can save on show space fees by sharing a US National Pavilion with
other US companies interested in establishing presence in Russia, and
wishing to decrease market entry expenditures. The Commercial Service
staff will always be at the pavilion to assist you in your negotiations
with potential customers. We can assist you in finding/contracting booth
staff and interpreters. After the show, we will help follow up with
Russian customers that negotiated distributor agreement or buying your
products. Thus, we will continue to work with you to develop the trade
leads generated on the show floor.

For more information about the show and the U.S. pavilion, contact:

Alexander Kansky, Commercial Specialist, U.S. Consulate, St. Petersburg,
Russia E-mail: alexander.kansky@mail.doc.gov
Tel: 011-7-812-326-2581, Fax: 011-7-812-326-2561

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Mercedes Mulls St. Pete Plant

By Anna Smolchenko, Moscow Times

DaimlerChrysler intends to build Mercedes Benz models in St. Petersburg
by the end of the year, the Kremlin said late Monday, citing the
chairman of the German-U.S. auto giant.
“I am hoping that the first Mercedes will come off the assembly line
this fall,” Jurgen Schrempp told President Vladimir Putin, according to
a transcript on the Kremlin web site.
Schrempp gave no more details, and Putin was quoted as saying that
negotiations were in the final stages. While media have reported that
Mercedes was eyeing Russia, analysts expressed surprise at the speed
with which Schrempp wants to forge ahead.
As the government opens the home market, foreign carmakers are rushing
in. Only last month, Toyota announced the construction of a new plant in
St. Petersburg. The remarks by Schrempp came on the heels of a Daimler
advisory board meeting in Moscow last weekend.
A spokesman for Daimler in Stuttgart, Germany, confirmed the company’s
plans to assemble Mercedes in Russia but declined to provide any
details, saying only that St. Petersburg was under consideration.
More information should be available during the city’s annual economic
forum next month, said a St. Petersburg city official.
Gerhard Hilgert, head of Daimler in Russia, said that Moscow region is
also under consideration, and that the firm may enter a partnership with
a domestic company to assemble models including the Jeep and Chrysler
brands, Interfax reported.
Hilgert also said the company was interested in Russian-made components,
the agency reported.
Schrempp’s announcement was mostly surprising because of the timeframe
he gave. There is no time to build a plant that could produce cars by
the fall, he said, adding that in St. Petersburg there are virtually no
carmakers with which to enter into a partnership.
Ford opened its own plant in St. Petersburg in 2002. But Denis
Nushtayev, an analyst with Metropol consultancy, said the time frame was
achievable if Daimler builds cars from semi-knocked-down kits, which do
not require a fully fledged plant.
The company will most likely start with C-class and E-class models, the
two most popular Mercedes models in Russia, Nushtayev said. Of the 4,029
passenger Mercedes cars sold in Russia last year, 1,185 were C-class and
1,262 E-class.

********** Sent by: ***********************************
Charles Raether, BISNIS Trade Specialist for Automotive Sector
U.S. Department of Commerce
Tel: 202/482-2022
Fax: 202/482-2293