GM, GAZ Budget Car Deal Nears

General Motors and GAZ, billionaire Oleg Deripaska's carmaker, are close to an agreement on forming a venture to produce budget cars, Vedomosti reported Wednesday, citing unidentified people familiar with the talks.

The companies may sell the cars for less than $10,000 each, the paper said.

Production at a GAZ plant in the Nizhny Novgorod region of central Russia would be able to turn out 50,000 cars per year initially, and as many as 300,000 a year later, Vedomosti said. GAZ would need to invest about $1 billion in the project, the newspaper reported.

GM is the only foreign carmaker in Russia that both builds cars on its own and with a local partner. Its models are also assembled at a private plant in Kaliningrad, as well as in Ukraine, Kazakhstan and Uzbekistan.

Russia, Britain, Italy, Ukraine and Greece were the main contributors to GM's growth last year. GM said last month that it almost doubled its sales in Russia last year.

Bloomberg, MT