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. Last Updated: 07/27/2016

AvtoVAZ Rolls Out New Niva

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Russia's beloved answer to the Land Rover has been reborn.

Carmaking giant AvtoVAZ is rolling out its first new model of the four-wheel drive Niva in seven years.

Not unexpectedly for a company that employs nearly half the town, the first 10 Niva VAZ-2123s are available only in Toyatti, AvtoVAZ's headquarters.

While AvtoVAZ wouldn't say when the new Niva will be available in Moscow — it was scheduled to be announced at the official unveiling in Tolyatti on Friday — company spokesman Vladimir Artsekov said that just 2,000 units would be produced this year, so getting one may be difficult.

Sporting a 1.7-liter engine and a price tag of about $9,000, the production of the new model was supposed to be the cornerstone of a joint venture between AvtoVAZ and world No. 1 automaker General Motors.

But with negotiations between the two dragging on for over three years now, AvtoVAZ decided to go ahead with the Niva project solo.

Negotiations on the joint venture, which calls for a $500 million investment to reach a production target of 90,000 units of different models a year, was joined last summer by a third party — the European Bank for Reconstruction and Development, Russia's largest private investor.

As it now stands, the deal would give GM and AvtoVAZ an equal 40 percent share of the company, with the EBRD owning 20 percent.

GM spokesman Alexander Moynov said Thursday that negotiations are continuing and "all three sides are working very seriously on the project," and a final agreement will be reached "very soon."

But AvtoVAZ CEO Vladimir Kadannikov was quoted by Interfax on Thursday as saying that AvtoVAZ and GM had completed negotiations and that the final decision would be made by GM's board of directors later this month.

Yulia Zhdanova, an analyst at United Financial Group, said AvtoVAZ basically had to prove to GM that it could launch the new Niva on its own before GM would give final approval to the joint venture.

"The production of the new Niva demonstrates the ability of AvtoVAZ to put pressure on General Motors to hurry them up," Zhdanova said.

Moynov called the new Niva "a very interesting product" and said that GM evaluated it as "worthy."

AvtoVAZ, which has sales of over $2 billion a year, is a healthy company with stable demand for their products and can survive even without the massive GM investment, said Eugene Satskov, an analyst at Renaissance Capital.

However, Satskov said, a deal with GM would allow AvtoVAZ to increase its production two to three years sooner than it could do alone, and it would greatly increase exports using GM's global distribution network.

GM's goal, in Satskov's opinion, is to begin producing cars in Russia without having to invest a lot of money into production facilities at the AvtoVAZ plant, he said.

Last year AvtoVAZ produced 705,000 cars, 4.5 percent more than in 1999, and exported 90,000 of them.

AvtoVAZ plans this year to produce over 750,000 cars and export about 130,000.