MOSCOW, Feb. 11 (Xinhua) -- Italian car giant Fiat and Russian automaker Sollers signed a deal on Thursday to establish a joint venture that is expected to produce up to 500,000 vehicles annually.

The deal was signed by Fiat head Sergio Marchionne and Sollers chief Vadim Shvetsov in Naberezhnye Chelny, a city 1,000 km east of Moscow in the Tatarstan region.

The 2.4 billion-euro (3.3 billion U.S. dollars) plant will be capable of manufacturing up to 500,000 cars per year by 2016, with at least 10 percent of its production bound for foreign markets, the companies said.

Both sides will hold equal stakes in the venture, with Fiat contributing technologies and Sollers providing production capacity, they said.

Russian Prime Minister Vladimir Putin, who also attended the signing ceremony, said the government would consider a 2.1 billion- euro (2.9 billion dollars) loan for the joint venture that aims to become Russia's second largest car producer after AvtoVAZ.

The government is prepared to finance the joint project by involving major banks in which the state has stakes, Putin said in televised remarks.

The venture symbolizes the first major foreign investment in Russia's struggling auto industry since the global economic crisis triggered a collapse in car sales in the country.

Russia, which was on track to become Europe's largest car market in 2008, saw a decline of 49 percent in car sales in 2009 from a year earlier, according to the Association of European Businesses.