BERLIN (Bloomberg) - Volkswagen AG, Europe's largest carmaker, opened a Russian factory yesterday, seeking to triple its share of the country's market and joining rivals Ford Motor Co. and Renault SA in beginning production in one of the fastest growing car markets.

"By 2010, 45 million Russian households will be able to afford an automobile," chief executive Martin Winterkorn said at the factory's inauguration in Kaluga, 160 kilometers (99 miles) southwest of Moscow. Russia "has a huge potential, and we are going to use it."

Volkswagen, based in Wolfsburg, Germany, plans to increase its share of the Russian market to 10 percent in 2010 from three percent currently. The country provides an opportunity for growth for automakers as Russians spent a record $16 billion on new foreign cars in the first half, fueled by rising incomes, according to PricewaterhouseCoopers LLP.

"Local production should help Volkswagen gain more market share, primarily because avoiding the 25 percent import tariff will make it more price competitive," said Michael Tyndall, an industry analyst with Nomura Securities in London who has a "buy" rating on Volkswagen. The company should be able to sell a lot more cars "given its share of the global market."

Russia's oil-fueled economy, which the government forecasts will grow 7.3 percent this year, is expanding for the ninth year. Ten-month foreign car sales in Russia surged 64 percent to 1.31 million vehicles.

Ford, the world's third-largest carmaker, is spending $100 million to expand capacity at a St. Petersburg plant by almost 75 percent over the next two years. Renault, France's second- largest automaker, opened a $250 million Moscow plant in 2005.

General Motors Corp., the world's biggest carmaker, is building a factory on the outskirts of St. Petersburg that will produce 70,000 cars a year, while Toyota Motor Corp., the world's second-largest carmaker, is investing more than $150 million in a Russian plant.

Volkswagen will build 66,000 cars at the plant next year and plans to eventually assemble 150,000 vehicles at the factory. The carmaker will start by building the Passat mid-sized sedan and the Skoda Octavia, then expand production to the Skoda Fabia and a Volkswagen brand small car developed for Russia. All the cars will be sold for under 10,000 euros ($14,811).

"Opening our first production plant in Russia is a milestone in Skoda Auto's expansion to eastern markets," Reinhard Jung, Skoda's CEO, said.

"The region is growing very dynamically and we look at it with high hopes as far as the future of Skoda Auto is concerned."

The Russian expansion is part of Winterkorn's push to increase sales to eight million vehicles worldwide by 2010 and challenge Toyota, the world's second-largest carmaker.

Volkswagen, the No. 4, last night in Moscow raised its sales target for this year to a record 6.2 million vehicles from "more than" six million previously.

Winterkorn plans to invest 28.9 billion euros over the next three years to develop the new models, build the plant in Russia and also open a factory in India.

The Volkswagen brand currently ranks 14th in Russian car sales, while Skoda is 16th.

The carmaker forecasts its sales this year in the country will rise 61 percent to 31,000 cars.