Avtovaz will launch a new less expensive model of its Lada car next year, selling for 5,600 euros (US$7,100), its French partner company Renault said on August 27.
Avtovaz is reworking its best-known product line and plans the new model by the end of 2011, a spokeswoman for Renault, which holds a 25% stake in the Russian company, said.
French newspaper Liberation reported that the new car would be called the Lada Granta and be similar to Renault's Twingo, a popular compact model.
To make it, Aftovaz is building a new production line which Renault has shown an interest in buying if the Granta is a success, raising the prospect of the car being sold outside Russia, Liberation reported.
Renault said the model is primarily destined for the Russian market but the firm "could consider negotiating" to sell it elsewhere.
The price tag is estimated at 220,000 robles, or about 5,600 euros, which would make it one of the cheapest cars in Europe. The Nano made by Tata of India is considered the world's cheapest car at around $2,500.
Another cheap model, the Logan made by Renault's Romanian subsidiary Dacia, was initially aimed at emerging markets but now sells well in Western Europe, annoying some politicians who see it as hitting French Renault jobs.
Copyright Agence France-Presse, 2010