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AvtoVAZ Cuts Back on Fiat Investments
The management of AvtoVAZ altered the parameters of its partnership with Fiat yesterday. The output of their joint engine production will be reduced to 450,000 per year and AvtoVAZ may take the larger class B platform from Fiat instead of a class A for their new automobile. Analysts say the changes will reduce the investment load of the joint project. AvtoVAZ group president Vladimir Artyakov said yesterday that the parties are discussing the delivery of the engines to the assembly plant, but they may manufacture them in the future. He said an engine plant would cost about $800 million.
The possibility of a technical partnership between AvtoVAZ and Fiat was first announced at the air show at Le Bourge, France, by AvtoVAZ chairman of the board and Rosoboronexport general director Sergey Chemezov. He spoke of a car with a class-A body at a cost of “just over ˆ5000” and engine production of 1.5 million pieces per year at the time.
IFD Capital analyst Mikhail Pak noted that 450,000 engines would meet AvtoVAZ's needs. The company has already begun construction of its own engine plant with that capacity in Togliatti. The capacity of that plant could be expanded. Other analysts note that AvtoVAZ already has a class-B automobile on the market, the Lada Kalina, although it could potentially be replaced with a better product. The market for class-A vehicles is smaller in Russia. An AvtoVAZ source said that the possibility of creating a platform to fit either class is being discussed.
www.kommersant.com
All the Article in Russian as of July 06, 2007
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