A number of foreign companies, including giants such as America's Ford Motor Company, Germany's Volkswagen and Japan's Toyota, have either already opened or are planning to open plants in Russia in the last few years.
"Volkswagen's project is on track," German Gref said. "We have agreed that it will be launched at the end of this month, when the cornerstone will be laid. A construction site is being prepared now."
The ministry press service said Gref was planning to visit the Kaluga Region on October 28 to attend the groundbreaking ceremony for the Volkswagen plant.
The ministry said earlier up to 900,000 foreign cars a year would be assembled in Russia by 2010 and investment would hit $2 billion.
With foreign automakers starting to produce moderately priced vehicles - the Renault Logan for example retails at around a no frills $8,000 - ordinary Russians are increasingly taking them out of the showroom in preference to similarly priced domestic models, which are not always seen as being wholly reliable.
According to the ministry's figures for the first half of the year, Russian cars still lead the market with a 42.9% share (48% a year ago), followed by new foreign cars with 33.8% (26%), Russian-made foreign cars with 12% (9%), and used foreign cars with 11.3% (17%).
