MOSCOW – Russia signed an agreement with Volkswagen for a car production plant yesterday and appeared on the verge of a deal with General Motors as foreign auto makers continued to boost their operations in a nation whose emerging middle class is shunning domestically designed models.

Volkswagen AG’s chairman Bernd Pischetsrieder signed an agreement with the minister of trade and economic development, German Gref, to build a nearly $510 million, 115,000-vehicle plant in the city of Kaluga, southwest of Moscow.

“The decision took a long time … this was not a fast path and our competitors have overtaken us to an extent – we’ll have to be all the more active,” Mr. Pischetsrieder said. VW had announced its deal to build a plant in Kaluga on Friday, after also considering four other locations.

According to the Trade and Economic Development Ministry, the German carmaker will initially spend $345 million on the plant, with a further $128 million to be invested to launch fullscale production.

A spokeswoman for Mr. Gref’s ministry said the facility would be commissioned in September 2008, and would initially assemble the Skoda Octavia but would eventually roll out VW’s Polo, Passat, and Touareg brands, which are popular in Russia. Construction is to begin in August, she said.

Mr. Gref said VW was planning a “gift” for Russian drivers. “The company has plans to roll out a special car for the Russian market,” he said in televised comments.

Mr. Gref’s ministry also said that General Motors Corporation will build a car production facility and that GM’s vice president, Carl-Peter Forster, was due to conclude the deal at an evening signing ceremony, but the ceremony was later canceled.

Marc Kempe, a spokesman for GM in Europe, had confirmed earlier yesterday that Forster would be in Moscow but denied any final deal had been reached. “Yes, we are in negotiations looking at the possibility of investing in an assembly plant, but no, no final decision has been reached,” he told the Associated Press.