MOSCOW – Renault and Nissan have signed an agreement with state conglomerate Russian Technologies to create a joint venture that will allow the auto alliance to gain control of Russia’s top carmaker, Avtovaz.
By mid-2014, the Renault-Nissan alliance will hold 67.13 percent of the new joint venture, which is to be called Alliance Rostec Auto BV and which will own 74.5 percent of Avtovaz, maker of the iconic Lada.
Russian Technologies will hold 32.87 percent of the joint venture.
The companies said in a statement they would act as “a stable, long-term controlling shareholder for Russia’s largest car company.”
The Wednesday deal marks an extremely rare instance of a foreign entity being allowed control of a major Russian business and household-name brand, albeit in close cooperation with the state.
The French-Japanese alliance is to invest 23 billion rubles ($742 million, €570 million) in the joint venture. Between them, Renault-Nissan and Russian Technologies are expecting to grab 40 percent 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 million mark, becoming the first market in Europe,” said Renault-Nissan chief executive Carlos Ghosn. “I don’t think there is a risk of overcapacity in Russia.”
He emphasized that the management of Avtovaz will be responsible for the results of the company and the growth of the Lada brand under the new arrangement.
“We are not interested in transforming Avtovaz into a subsidiary. We are interested in a strong company with a strong Russian identity,” said Ghosn.
He said Russia was already the third market worldwide for Renault, after France and Brazil.
Bruno Ancelin, director of Renault in Russia, said the deal will “develop the Lada brand on the Russian market, create production capacity for Renault and Nissan and allow Lada to obtain technology and realize synergies with the two other brands.”
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.
Chemezov said the Lada brand — mocked by some for its notoriously boxy Soviet-era cars — was being retained and would be developed in Russia.
He added: “We are retaining a blocking minority and we will defend Russia’s interests.”
Tensions with China delay Fuji Heavy output boost in U.S.
Fuji Heavy Industries Ltd.’s president says the maker of Subaru cars delayed making a decision on its U.S. capacity expansion because slumping demand in China and Europe gave the company more room to ship vehicles to America.
The company will decide on the expansion by the end of the business year in March, instead of the previous plan to do so by the end of December, President Yasuyuki Yoshinaga said in an interview at the company’s Tokyo headquarters Tuesday.
Fuji Heavy will probably choose an “incremental” expansion in U.S. manufacturing rather than building a new factory, he said.
The comments illustrate how the slump in Chinese demand for Japanese products — fueled by the diplomatic row that flared in September over the Senkaku Islands — is interfering with global strategies.
Auto parts makers from Koito Manufacturing Co. to Sumitomo Electric Industries Ltd. have said they’re considering stepping up their expansion in regions such as Southeast Asia to counter the risk of conducting business in China.