The Russian market has been targeted as a country for growth by both manufacturers and the new production plant will help boost their presence.
The joint venture production plant will be located in Kaluga, south west of Moscow and will produce the Outlander, 4007 and C-Crosser for Mitsubishi, Peugeot and Citroën as well as medium size Peugeot and Citroën vehicles.
Capacity is hoped to reach 160,000 vehicles.
In 2005, MMC and PSA Peugeot Citroën began working together on an SUV for the European market. The 4007, C-Crosser and Outlander have been on sale in Europe from 2007.