The Russian car market grew by over 14% in 2005

The two plants near St Petersburg are part of a surge of Russian activity from world carmakers, eager to tap into a fast-developing market.

Consultants Ernst & Young claim the Russian car market grew by 14% last year to 1.8 million vehicles.

Toyota, Renault and Kia Motors all launched Russian plants in 2005.

Growth market

GM's $115m plant will produce the Chevrolet Captiva sports utility vehicles and a yet-to-be-named compact car from October 2008, with an annual capacity of 25,000.

It already has a $340m joint venture with Russian car company AvtoVaz, which has been running since 2001.

"With the addition of this new, wholly-owned facility, GM and its partners will be able to assemble more than 100,000 cars a year in Russia," said GM chief executive Rick Wagoner at the ground-breaking ceremony for the plant, which will employ 700 workers.

GM Europe president Carl-Peter Forster said the Russian car market was growing at 10-20%, compared to the 1-3% growth seen in mature western European markets.

The company said it sold 11,000 cars in Russia in May, up by 80% on the same period in 2005.

Joining the WTO

On Tuesday, Nissan signed a $200m deal, announced last April, which will see it producing 50,000 cars per year by October 2008.

It has said it will adapt its cars for the Russian market.

Last month, Volkswagen signed an agreement with the Russian government to build a $500m plant (�271m) outside Moscow, capable of producing 115,000 cars a year.

Russia is on target to join the World Trade Organization (WTO) some time in 2007, making it a less risky and more attractive destination for foreign investment.