Nissan has opened its first factory in Russia. The Japanese car giant will produce Teana sedans and X-Trail SUVs in St. Petersburg, with a new small car possibly next.

Nissan became the latest international automaker to launch production in St. Petersburg. The region's Governor, Valentina Matvienko, says the move helps anchor Russia’s second city as a global automotive production hub.

“Today we can say an automobile cluster’s been created in St. Petersburg. Nissan’s factory becomes the third in what we call the Petersburg Detroit, and for its technological complexity – the most important.”

But it comes at a bad time for the industry with Russian car sales slashed by half. Worst hit have been upmarket models such as those which will be the first to roll off the new plants production lines – the Teana and X-Trail.

Nissan’s partner Renault makes Logans in Russia, which sell from $6,000. The Teana will retail from $27,000. It’s a risky bet for a developing country in the best of times, let alone the current crisis.

Nissan's President, Carlos Ghosn, admits demand has changed and offered a tantalising hint that a new, small, and cheaper model will also be built at the plant.

“We may expand the product lineup in this plant in the future – no one can compete in Russia without an affordable sedan or an entry-level sedan. And we will produce it by leveraging our alliance – Renault, Nissan, Avtovaz.”

Ghosn says he could delay projects anywhere except Russia, whose auto market will "rebound first and best from the global economic crisis."