Construction of BMW plant in Kaliningrad may start this year - governor

German carmaker BMW Group may start the construction of a full cycle plant in Russia’s Kaliningrad region before the end of 2018.

At the end of March 2017, BMW announced plans to make a final decision on the construction of a plant of complete production cycle in Kaliningrad.

It was planned that by June the terms of a special investment contract between BMW, Avtotor (a local carmaker), Russian Industry and Trade Ministry and the regional government will be set.

The new mechanism implies that the authorities guarantee unchanged tax conditions to foreign and domestic industrial producers while those guarantee making investments.

Earlier it became known that BMW chose Kaliningrad, Russia’s westernmost region, to build a plant of complete production cycle. It was reported that the plant may be built on the site of the industrial park Khrabrovo. The contract for the construction should be signed this year.

In February Alikhanov said that the Kaliningrad region, in addition to allocation of the infrastructure of the park, is ready to invest about 250 mln rubles ($4.4 mln) in the development of the BMW production site.

"If we fulfill the deadline we set for ourselves [signing a special investment contract at the St. Petersburg Economic Forum SPIEF], then the construction will take two to two and a half years," he said. This year, SIPEF will be held on May 24-26.

In 2013, Avtotor (local carmaker) and BMW signed a package of agreements establishing a joint company. A subsidiary of this company was registered in Kaliningrad. In order to further develop the production of cars in Russia, an agreement was concluded between BMW and the Russian holding company to launch a plant with complete production cycle in the region.

In April 2015, an agreement on partnership and cooperation was signed between Avtotor and the regional government. In early 2018, BMW announced the establishment of its subsidiary OOO BMW Rusland Automotive in Kaliningrad.