Renault-Nissan planning second engine to be built with AvtoVAZ image

The French-Japanese alliance will build a second engine with Russian partner AvtoVAZ and aims to overcome a decline in Lada sales in a market set to overtake Germany within two years, according to Renault’s regional boss.

Production of a long-planned 1.6-litre engine begins this week at the AvtoVAZ plant in Togliatti and will soon expand to a second petrol engine, Bruno Ancelin said in an interview at the French carmaker’s headquarters outside Paris.

Renault and Japanese alliance partner Nissan are increasing local parts sourcing as they prepare to take control of the maker of Lada cars and defend a combined 30 % market share against fast-approaching Hyundai.

Russian auto sales have fallen 7 % so far this year as the broader economy falters on declining oil and gas revenues that have helped propel the rouble to a four-year low. But Renault expects the market to return to growth of about 3.5 % next year after sliding between 6 and 7 % to 2.8 million cars in 2013.

“This kind of mini-crisis has happened before without going full-blown,” Ancelin said.

Underlying demand remains strong, in a country where more than half the cars on the road are at least 10 years old, and will overtake the German market within two years, he predicted.

Renault owns 43.4 % of Nissan and paid $1 billion for an initial 25 % AvtoVAZ stake in 2008. Under a deal struck last year, Renault and its Japanese affiliate are to take joint control of the Russian automaker in 2014.

The new 1.6-litre engines produced in Togliatti will power models including the Renault Logan sedan, Duster SUV and Sandero mini, as well as Nissan’s Almera and the Lada Largus.

Via Reuters