AvtoVAZ CEO Sergei Chemezov, right and Renault Nissan CEO Carlos Ghosn, left, shake hands after inking a Memorandum of Understanding in AvtoVAZ headquarters in Tolyatti, the Samara Region of Russia.
Photo: Evgeni Gladkov
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AvtoVAZ Joins Renault-Nissan Alliance
AvtoVAZ and Renault have sealed a partnership agreement to create a carmaker that will yield only to General Motors and Toyota. Renault is to pay over $1.3 billion for a blocking stake in AvtoVAZ but neither the deal details nor the terms for transferring car platforms to AvtoVAZ have been agreed so far.
AvtoVAZ CEO Sergei Chemezov and Renault Nissan CEO Carlos Ghosn inked a Memorandum of Understanding Saturday. The document spells out an intention “to renew the lineup, exchange technologies and promote the Lada brand.” According to Chemezov, the partners agreed to sign a contract by February 26, specifying the sale of a blocking stake in AvtoVAZ to Renault at the price “close to the market one.” “Renault attracted us by the price and readiness to preserve the Lada brand,” Chemezov explained.
Renault and AvtoVAZ pledge to double output of the latter to 1.5 million cars by 2014, launch new models of B-/C-class and create engine production with the annual capacity of 450,000 to 500,000 engines a year. A C-class car will cost $12,000 to $16,000, and the price for a car of B-class is estimated at $10,000 to $12,000. Another moderate-priced car ($8,000 to $10,000) will probably emerge based on Lada Kalina, which costs $10,000 to $12,000 today.
Canadian Magna has been developing the C-platform for AvtoVAZ since December 2006, but the sources say it will no longer play the key role in the project. AvtoVAZ will assemble some models of Renault and Nissan, Ghosn promised without giving any details.
The worth of new projects hasn’t been disclosed. Chemezov gave only the minimal amount of $900 million. The partners vow to set up a three-party alliance of Renault – Nissan – AvtoVAZ that will join the trio of global leaders by 2013 or 2014. Under the estimate of PricewaterhouseCoopers, Toyota (11.5 million cars) and GM (9.8 million) will lead by 2014. AvtoVAZ, Renault and Nissan (9.5 million) could win the third rating.
According to the sources, the deal budget with Renault will exceed $1.36 billion, but AvtoVAZ will get no more than a half for development. The better part of the amount will go to Troika Capital Partners (TCP) that bought out 22 percent in AvtoVAZ in 2006 and intends to pull out of it with premium by the fall of 2008 once the carmaker is through with IPO.
www.kommersant.com
All the Article in Russian as of Dec. 10, 2007
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