Renault Says AvtoVAZ Keeps It Busy

BloombergGhosn speaking in India last year. He said Tuesday that Renault's deal with AvtoVAZ would slow its entry into China.
GENEVA -- Renault's billion-dollar deal to take a 25 percent stake in the maker of Lada cars will keep it busy for a while and will push back a decision on entering the Chinese market, chief executive Carlos Ghosn said Tuesday.

"We have enough to do for the next two years," he said, referring not only to the AvtoVAZ deal but also to other Renault projects to expand production of the Logan.

Talking to reporters at the Geneva Motor Show, Ghosn said the decision to consolidate fully the sales of Lada maker AvtoVAZ was not an accounting trick, as there would be a lot of Renault technology in the new Lada cars.

"We will be actively involved with the resurgence of the Lada brand," he said, adding that Renault had dispatched a group of 20-30 top level executives to AvtoVAZ. These will no longer be employed by Renault but will work with AvtoVAZ managers on the turnaround.

"Their mission is to succeed [at] AvtoVAZ and not to wear a Renault hat as well," Ghosn said.

He said the precise return on the investment in AvtoVAZ had not yet been established but was already in line with Renault's investment objectives.

"But there will be more -- we will sell technology to AvtoVAZ, we will be able to amortize investments over a larger number of cars. There is extra capacity in Tolyatti, and there is a supplier base that can also be used by Renault or Nissan," he said.

In fact, a team of Nissan officials will visit the Tolyatti site in March to see whether there is any potential for the Japanese carmaker, in which Renault has a 44.4 percent stake.

"With AvtoVAZ, Russia will become our largest home market," he said, adding that because Nissan was active in China, the alliance was not falling behind in that rapidly growing market.