Renault-Nissan to take an indirect majority stake in AVTOVAZ

Article by Christian A., on May 4, 2012

Russian Technologies Corp. will sell its majority holding in AvtoVAZ to the Renault-Nissan Alliance. This means that joint venture will then be the largest shareholder in Russia's biggest automaker. When combined, Renault and Nissan will invest around $750 million to take a majority holding in the joint venture, which will own 74.5% of AvtoVaz in turn.

Renault will provide $300 million of the investment while Nissan will give the rest. In 2008, Renault has already bought 25% of AvtoVAZ for $1 billion. The companies are hoping to finalize the agreement by the middle of 2014.

Carlos Ghosn, who heads both Renault and Nissan, is hoping that AvtoVaz will help boost its growth in Russia where the market could reach 4 million annual sales in 2015, beating Germany to become Europe's biggest due to increasing incomes and a sudden improvement in consumer spending.

In 2011, there were about 2.65 million cars and light commercial vehicles sold in the country. The market is likely to reach 2.9 million in 2012. AvtoVAZ seeks to acquire 25% of the Russian auto market in five years, or when combined with Renault and Nissan, it hopes to get 40%.

The alliance has a combined share of almost 33% for now in Russia, making the country the No. 3 market after China and the U.S. In a note to clients, Xavier Caroen, an analyst at Kepler Capital Markets, said that this move is expected to be “very positive” for Renault, which will continue to heavily invest in this expanding market. It would then be official that this group (combined with AvtoVAZ and Nissan) would dominate in Russia."

Last month, AvtoVAZ CEO Igor Komarov said that he hopes to borrow up to 60 billion rubles ($2 billion) by 2015 to fund the company’s biggest overhaul "in decades" to overhaul its vehicle lineup and compete with international brands.

An inauguration took place last month for a $525 million assembly line for the Lada Largus, the automaker's first model based on a Renault platform at AvtoVAZ's Togliatti factory. Russian Prime Minister Vladimir Putin himself led the inaugural ceremony. This facility adds capacity of as many as 350,000 cars a year and puts the total annual capacity of the plant to nearly a million cars.

Topics: renault, nissan, avtovaz

If you liked the article, share on:

Comments

Recommended

Citroen revealed that its entry to the Chinese market is moving forward with the planned release of the new generation C5. While still on sale on this part of the...
by - February 26, 2017
There is definitely a second-generation Super Series from McLaren. Even in camouflaged form, it is simply incredible. But while we still don’t have the full data on how truly dynamic...
by - February 25, 2017
A lot of fans are excited with the news that Porsche could be unveiling a performance version of its Panamera 4 E-Hybrid plug-in hybrid during the 2017 Geneva Auto Show. ...
by - February 25, 2017
Tesla is finally setting a more “definite” schedule with regards to the official launch of the Tesla Model 3 electric car. A “limited production” is said to be slated to...
by - February 25, 2017
Are you a big fan of legendary boxer Mike Tyson, the former heavyweight world champion? Or are you a big fan of the iconic Ferrari F50? Either way, you will...
by - February 24, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries