Renault-Nissan will get a majority stake in the joint venture, called Alliance Rostec Auto BV
The Renault-Nissan Alliance and Russian Technologies State Corporation have recently created a joint venture with AVTOVAZ to serve as a stable, long-term controlling shareholder for Russia’s largest car company and the owner of the LADA brand.
Renault-Nissan Chairman and CEO Carlos Ghosn announced the creation of Alliance Rostec Auto BV at a ceremony in Moscow with Sergey Chemezov, General Director of Russian Technologies and Chairman of the Board of AVTOVAZ, and Igor Komarov, President of AVTOVAZ.
“Today’s historic agreement is a win-win-win for all companies: Renault, Nissan and AVTOVAZ. It is a significant new chapter in an already solid partnership,” Ghosn said. “The joint venture will help accelerate our Russian market offensive. It will support the competitiveness of AVTOVAZ, Russia’s auto industry leader.”
According to the terms of the deal, Renault-Nissan will invest RUB23 billion (US$ 742 million). The investment will give Renault-Nissan 67.13% of the joint venture by mid-2014. The joint venture will then hold 74.5% of AVTOVAZ.
Renault, which purchased 25% of AVTOVAZ in 2008, will invest about RUB11.3 billion (US$366 million) in the joint venture and plans to own 50.1% in the joint venture by June 2014. Nissan which did not previously own a stake in AVTOVAZ, will invest RUB11.7 billion (US$376 million) and plans to own 17.03% in the joint venture by the same period.
Over the same period, Russian Technologies will hold 32.87% of the joint venture.
By the completion of the deal in 2014, Alliance Rostec Auto BV will have bought out all the shares in AVTOVAZ currently owned by the company Troika Dialog Investment Ltd.
“The Russian automotive market is on the edge of becoming No. 1 in Europe in terms of new vehicle sales," said the General Director of Russian Technologies Sergey Chemezov. "By 2020, AVTOVAZ, together with its partners, expects to produce, annually, over 1 million cars matching the highest world standards. Thanks to the partnership with the Renault-Nissan Alliance, new modern and highly paid working places will be created for the inhabitants of Togliatti and the region”.
The deal comes eight months after President of the Russian Federation Vladimir Putin inaugurated an assembly complex with manufacturing capacity of 350,000 vehicles per year in Togliatti in Russia’s Samara region. The complex will become home to one of the largest platform-sharing programs in the Renault-Nissan Alliance. It has already started the production of LADA Largus in spring 2012 while the manufacturing of the new Nissan Almera was launched recently with full ramp-up in spring 2013.
Production will soon span five models across three brands – LADA, Renault and Nissan.