DMLRY Mercedes Benz Group AG (PK)

By William Boston

German luxury car maker Daimler AG (DAI.XE) said Tuesday it would invest more than 250 million euros ($265 million) in a new factory in Russia to build E-Class passenger cars, a sign that auto makers are beginning to gain confidence as demand returns to the battered Russian economy.

Auto makers have been losing ground in Russia for several years and Daimler has taken a long time to commit to building a new plant. The announcement comes amid signs that the decline in Russian new car sales may be bottoming out.

Mercedes Benz, Daimler's passenger car business, will build the factory in the industrial park in Esipovo, just north of Moscow. Production of E-Class sport-utility vehicles and sedans is expected to begin in 2019.

"Russia is of strategic importance for Mercedes-Benz and an attractive growth market," Markus Schaefer, a Mercedes-Benz board member in charge of production and supply chain management, said in a statement.

Daimler said it expects to create more than 1,000 manufacturing jobs at the plant and boost employment for local suppliers and service providers.

Daimler and its Russian joint venture Daimler Kamaz, a partnership with the Kamaz automotive group, have created a 50-50 joint venture to build and operate the new plant.

Write to William Boston at William.Boston@wsj.com

(END) Dow Jones Newswires

February 21, 2017 11:40 ET (16:40 GMT)

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