South Korea's top carmaker Hyundai Motor signed a deal on Monday to build a car factory in Russia with a capacity of 100,000 vehicles a year, officials said.
Hyundai officials said the company would invest 400 million dollars to build the factory in St Petersburg in the first half of next year.
The deal was signed in South Korea between Hyundai Motor vice chairman Kim Dong-Jin and St. Petersburg governor Valentina Matviyenko, they said.
It would be Hyundai's sixth overseas plant. The company has plants in the United States, China, India and Turkey and a fifth is under construction in the Czech Republic.
"We hope the plant will help Hyundai become a brand to be loved by Russians," Hyundai chairman Chung Mong-Koo said in a statement.
Hyundai says it is the best seller in Russia's foreign car market. In the first seven months of this year it sold 67,349 cars in Russia, up 20 percent from a year earlier.
Hyundai with its affiliate Kia Motors is the world's sixth largest automaker. It aims to become number five but growth has been threatened by competition, falling productivity and labour disputes.
The group controls more than 70 per cent of the South Korean auto market.