The plant's first facility for assembling Volkswagen and Skoda cars is scheduled to be built by the end of July 2007, and construction of the whole factory will be completed in the second half of 2009, a spokesman said.
The plant is expected to reach a production volume of 115,000 cars a year. Investment in the project will be $340 million during the first stage and another $130 million in the second.
Economic Development and Trade Minister German Gref, who laid the cornerstone in the plant's foundation at a ceremony last October attended by the Volkswagen management, said during the event that by 2010, VW cars in Russia will be sold at a price at least 20% lower than now, and as localization of manufacturing increases, the price will fall even further.
A number of foreign companies, including giants such as America's Ford Motor Company and Japan's Toyota, have either already opened or have announced plans to open auto plants in Russia in the last few years.
The economics ministry said earlier that up to 900,000 foreign cars a year would be assembled in Russia by 2010, with investment hitting $2 billion.
With foreign carmakers starting to produce moderately-priced vehicles - the Renault Logan for example retails at around a no-frills $8,000 - ordinary Russians are increasingly snapping them up in preference to similarly-priced domestic models, which are not always seen as being wholly reliable.
