MOSCOW -- Renault-Nissan (IW 1000/78) on Wednesday signed an agreement with Russian state conglomerate Russian Technologies to create a joint venture which will allow the auto alliance to gain control of Russia’s top carmaker Avtovaz.
By mid-2014, Renault-Nissan will hold 67.13% of the new joint venture which is to be called Alliance Rostec Auto BV and which will own 74.5% of Avtovaz, the maker of the iconic Russian Lada car.
Russian Technologies will hold 32.87% of the joint venture.
The French-Japanese alliance is to invest a total of 23 billion rubles (US$742 million) in the alliance.
Between them, Renault-Nissan and Russian Technologies are expecting to cover 40% of the Russian market by 2016.
“The Russian market is 2.9 million vehicles and is going to continue to grow to reach by 2020 the 4.0 million mark, becoming the first market in Europe,” said Renault-Nissan chief executive Carlos Ghosn.
He emphasized that the management of Avtovaz will be responsible for results of the company and the growth of the Lada brand under the new arrangement.
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"We are not interested in transforming Avtovaz into a subsidiary. We are interested in a strong company with a strong Russian identity," said Ghosn.
Russian Technologies chief executive Sergei Chemezov, a close ally of President Vladimir Putin, said the Russian auto market is on the verge of becoming number one in Europe in terms of new vehicle sales.
"By 2020, Avtovaz, together with its partners, expects to produce, annually, over 1.0 million cars matching the highest world standards," he said.
The takeover by Nissan-Renault marks a huge turnaround for Avtovaz, the existence of which appeared in danger in 2008 amid the financial crisis.
However the government stepped in to ensure the company kept operating and safeguard the future of tens of thousands of jobs in its home of the Volga city of Tolyatti where it is the main employer.
In 2008, Renault spent $1.0 billion to acquire a 25% stake in Avtovaz and create an alliance that was strongly supported by Putin.
Copyright Agence France-Presse, 2012