Renault buys into Russian carmaker
Renault has agreed to buy a 25 percent stake in Avtovaz, Russia's largest auto groupMOSCOW, December 10, 2007 - Renault said Saturday it has agreed to buy a 25
percent stake in Avtovaz, Russia's largest auto group and owner of the Lada
brand, to tap into the rapidly growing Russian car market.
"The Russian market is booming -- more than 20 percent growth this year and
a significant growth in the mid-term," Renault chief executive Carlos Ghosn
said at Avtovaz's factory at Togliatti on the banks of the Volga river.
Following a recapitalisation of Avtovaz in the first half of next year,
Renault and Russian Technologies, currently Avtovaz's main shareholder, will
own jointly a 50 percent stake, according to a memorandum of understanding.
Financial details of the deal, which Renault said it expects to finalise by
February 25, were not disclosed. Russian Technologies is controlled by the
country's state-owned arms export group Rosoboronexport.
A partnership will see Renault turn Avtovaz into a "global automotive
player," a Renault statement said, expanding output at the Togliatti plant to
1.5 million vehicles from the current 700,000 in the medium term.
"This enormous potential of 1.5 million vehicles per year will not only be
used to grow the Lada brand, but also eventually to produce Renault and Nissan
cars," Ghosn said.
"There is lots of room for Renault and Nissan to be able to grow their
market share" in Russia, he said.
The Russian car market is forecast to grow to 3.5-4.0 million units by 2015
from 2.5 million this year, Renault's finance chief Thierry Moulonguet said.
"This is a major step for Renault in its development in emerging markets,"
Moulonguet said in a conference call.
As well as Renault, US group General Motors, Italy's Fiat and Canadian
manufacturer Magna were also interested in taking a share in Avtovaz, Russian
newspaper Kommersant reported Friday, citing an Avtovaz executive.
Renault has been producing its Logan model at a factory in Moscow since
April 2005 while Nissan is due to open in the first half of 2009 its first
Russian factory in Saint Petersburg, the northern city hoping to become