Renault-Nissan poised for controlling stake in AvtoVAZ by March
Renault and Nissan are nearing a deal to secure majority control of Russia’s AvtoVAZ, with negotiations expected to conclude by March 2012.
Renault and Nissan are set to finalise a deal to take a controlling stake in AvtoVAZ, Russia’s largest carmaker, with the agreement expected as early as March 2012. AvtoVAZ chief Igor Komarov said the main issues between shareholders have been resolved, and negotiations with the Renault-Nissan alliance, Russian Technologies and Troika Dialog are nearing completion.
Renault paid $1 billion for a 25 percent stake in AvtoVAZ in 2008. The alliance now seeks to acquire another 25 percent, giving it majority control at 50 percent plus one share. The move is intended to deepen collaboration, leveraging AvtoVAZ’s Lada brand and Russian production base to cut costs and expand market share. The partners are negotiating with Troika Dialog and state-owned Russian Technologies, the other principal shareholders.
Alliance strategy for the Russian market
AvtoVAZ is a central player in Russia’s automotive sector, accounting for 45 percent of the country’s car production in 2010. Its Lada brand held a 23.6 percent share of the Russian market that year. The Renault-Nissan alliance sees AvtoVAZ as a key asset for increasing its presence in Russia, with a stated goal of 1.6 million vehicle deliveries in the country within five years. This would represent around 40 percent of the Russian market, according to company targets.
The alliance plans to integrate operations further by sharing production and suppliers. AvtoVAZ is expected to begin building engines and gearboxes for Renault and Nissan in 2012. Nissan, in particular, is preparing to launch a Russian-built model based on the Renault Logan platform. This local manufacturing approach is designed to reduce costs and improve competitiveness against rivals in the Russian market.
What the deal means for AvtoVAZ and the alliance
A controlling stake would allow Renault-Nissan to drive AvtoVAZ’s strategy and operations more directly. The alliance expects to benefit from AvtoVAZ’s manufacturing capacity and distribution network, while AvtoVAZ would gain access to new technology and platforms. The deal is also seen as a way to secure jobs and investment at AvtoVAZ’s Russian plants, as production of alliance models is set to increase.
The planned integration will see AvtoVAZ building not only Lada models but also vehicles for Renault and Nissan, including at the IzhAvto plant. This multi-brand strategy is already underway, with AvtoVAZ preparing to produce seven models across the three brands. For more on AvtoVAZ’s production plans, seeAvtoVAZ to Build Seven Models at IzhAvto for Lada, Renault and Nissan.
Next steps and timeline
According to AvtoVAZ’s CEO, the negotiations could be completed by March 2012, pending final agreement among shareholders. If successful, the Renault-Nissan alliance will hold a controlling interest and be positioned to accelerate its Russian expansion plans. The next year will see increased localisation of components and new model launches tailored for the Russian market.
