Renault, a 25% shareholder in Russia's carmaker Avtovaz, is ready to invest in the ailing auto giant, First Deputy Prime Minister Igor Shuvalov said on Oct. 6. "The most important thing is that Renault has confirmed strategic interest in the development of Avtovaz, including transferring the most advanced technologies," said Shuvalov.
"Renault considers that its acquisition of 25% plus one share was strategically right and justified," said Shuvalov.
Shuvalov did not provide further details. Olga Sergeyeva, a Moscow-based spokeswoman for Renault, said however the transfer of technologies was just one of the options.
Analysts say Renault is in a quandary after its one billion dollar investment in the troubled carmaker -- made in 2008 at the height of optimism over the Russian car indusrty -- has led to nothing but losses.
Putin warned Renault last week that its stake in Avtovaz could be diluted unless it provided help for the company, which has already announced plans to cut a quarter of its workforce.
Renault last year paid about a billion dollars (685 million euros) for a quarter of Avtovaz, angling for a foothold in what promised then to become Europe's fastest growing market.
Christian Esteve, head of Eurasia region for Renault, told Putin on Oct. 5 that his company felt "socially responsible" but declined to commit to any concrete moves.
On Oct. 6, Shuvalov presided over a meeting of top government officials and economists who considered ways to help prop up the country's troubled automotive sector. Shuvalov said the total debt of all car companies in Russia amounted to 100 billion rubles (US$3.35 billion). Shuvalov said the amount to be invested in Avtovaz would be determined after the carmaker comes up with a precise business plan.
The Kommersant business daily reported on Oct. 6 that Avtovaz needed at least 70 billion rubles (US$2.34 billion) to cover its debt among other things. Avtovaz spokesman Alexander Shmygov said he couldn't confirm the report.
The government is concerned that mass layoffs at Avtovaz, the key employer in Tolyatti, a city of 700,000 people on the Volga River, could spill into social unrest.
Putin said on Oct. 5 that the state would not allow the carmaker to cease to exist.
Copyright Agence France-Presse, 2009