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. Last Updated: 07/27/2016

AvtoVAZ, Magna Struggle on Joint Car Model

AvtoVAZ and Canada's Magna International are struggling to meet their goal of jointly making a car they can sell for under $12,000, Vedomosti reported Friday, citing unidentified people familiar with the project.

The projected retail price of the new model has risen 10 percent since the two companies formed a venture in December and may rise as much as 20 percent, the newspaper said.

AvtoVAZ, Russia's largest automaker, will struggle to survive if they cannot create a new model for under $15,000, Vedomosti said, citing Deutsche UFG analyst Yelena Sakhnova.

The newspaper cited a businessman close to the carmaker's management as saying AvtoVAZ could scrap its deal with Magna over the pricing issue.

AvtoVAZ and Magna, however, said Friday that their cooperation was continuing as planned.

"Optimal decisions on all issues of cooperation have been found," AvtoVAZ and Magna said in a joint statement.

The development of a basic car concept, the first phase of the project, has been completed, the statement said, adding that the companies were now looking to hire suppliers.

Bloomberg, MT