Nissan and Renault to buy controlling stake of Russia’s AvtoVAZ

Article by Christian Andrei, on December 28, 2011

Nissan Motor Co. and Renault may enter into a deal to purchase control of AvtoVAZ, which is the biggest car manufacturer in Russia, chief executive officer Igor Komarov of the Russian company revealed. He stated that the main issues among the shareholders have already been addressed. The discussions may be completed in March, he added.

In 2008, Renault purchased 25 percent share of AvtoVAZ for $1 billion. Renault is seeking to use the Russian automaker's Soviet-era Lada brand in order to lessen costs by sharing suppliers and production. Acquiring control of AvtoVAZ would also enable Renault to be on top of other international carmakers operating in Europe's most populous country, where car deliveries may outperform those of France this year.

Mitsushige Akino commented that with a huge population set to become even bigger, capturing the Russian market before other competitors enter is "definitely a good strategy." He further stated that in entering the market by taking control of the largest automaker, Renault and Nissan will not have a hard time to be accepted by the local customers. Akino manages around $600 million in Tokyo at Ichiyoshi Investment Management Co.

The alliance of Renault and Nissan has been in discussions with Troika Dialog and state-owned Russian Technologies Corp., both shareholders of AvtoVAZ, regarding the purchase of a 25 percent holding, for a total controlling stake of 50 percent plus one share.

In 2012, Nissan will launch a Russian-built vehicle based on the no-frills Logan range, the French carmaker said July 19. It also stated that AvtoVAZ may start producing gearboxes and engines for all three brands the following year. AvtoVAZ comprises 45 percent of Russia's production of 1.21 million automobiles in 2010, thanks to the 23.6 percent market share of Lada.

Topics: nissan, renault, russia

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