Renault Buys Stake In Russian Automaker

MOSCOW (AP) — French carmaker Renault SA signed an agreement Saturday to become a 25-percent shareholder and strategic partner with Russia's Avtovaz, maker of the boxy-but-iconic Lada compact car.

 

The agreement — signed in Togliatti, the Volga River city where Avtovaz is based — included Renault, investors Troika Capital Partners, which hold 25 percent of Avtovaz's shares, and Rostekhnologia, the wide-ranging state corporation whose businesses include major Avtovaz shareholder Rosoboronexport.

 

A statement from Renault said the deal would promote development of Avtovaz, which has struggled to keep market share against growing automobile imports and locally produced models of Western vehicles. It also said it would help ''grow the Lada brand while respecting its identity.''

 

The statement did not specify the share of Renault's stake, but Rosoboronexport said it would be 25 percent.

 

Renault beat out several other foreign automakers for the deal. Avtovaz said recently it had been considering General Motors and Fiat SpA.

 

''We decided to work together, especially because Renault has good experience in joint work with Nissan,'' Rostekhnologia head Sergei Chemezov said at a news conference with Renault CEO Carlos Ghosn, the ITAR-Tass news agency reported.

 

''Coming to Nissan, Renault did everything possible to protect the Nissan trademark. Our terms were just that — preserve the Lada trademark and develop it,'' Chemezov was quoted as saying.

 

Russia is one of the world's fastest-growing auto markets and is being increasingly targeted by the giant global manufacturers looking to offset stagnant markets in the United States and Europe.

 

According to the European Bank for Reconstruction and Development, Russia's automobile market grew by about 14 percent in 2006 — and there is still considerable room for growth.

 

The EBRD says Russia has about 157 cars per 1,000 people, compared with 560 in Germany.