Renault Buys into Russian Carmaker

Avtovaz will increase output to 1.5 million vehicle.s

Renault said on Dec. 8 it has agreed to buy a 25% stake in Avtovaz, Russia's largest auto group and owner of the Lada brand. "The Russian market is booming -- more than 20% growth this year and a significant growth in the mid-term," Renault chief executive Carlos Ghosn said at Avtovaz's factory at Togliatti.

Renault and Russian Technologies, currently Avtovaz's main shareholder, will own jointly a 50% stake. 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.

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.

As well as Renault, General Motors, Fiat and Magna were also interested in taking a share in Avtovaz, Russian newspaper Kommersant reported On Dec. 7, 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 Russia's Detroit.

Copyright Agence France-Presse, 2007

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