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. Last Updated: 07/27/2016

Renault, AvtoVAZ to Build Cars Jointly

TOLYATTI, Samara Region — Renault and partner AvtoVAZ agreed to build cars together starting in 2012, part of the French automaker’s effort to satisfy Russian government demands for aid to forestall dilution of the company’s stake.

The venture would make 300,000 vehicles per year by 2015, AvtoVAZ president Igor Komarov told reporters Friday at the company’s main plant in Tolyatti. AvtoVAZ will provide 25 percent of the funding, with the remainder coming from Renault’s alliance with Nissan, Komarov said.

Prime Minister Vladimir Putin said Oct. 2 that Renault should help finance AvtoVAZ’s overhaul as a shareholder or face having its holding reduced to less than 25 percent. Renault is ready to offer technology to help AvtoVAZ modernize production, First Deputy Prime Minister Igor Shuvalov said Thursday. The platform, including chassis and major parts, will be based on Renault’s low-cost Logan car.

The joint car project “signals that our strategic partners have confirmed their intention to keep their stake in AvtoVAZ,” Komarov said.

Renault acquired its holding in AvtoVAZ, the country’s biggest carmaker, at the end of 2007 for $1 billion. The government also owns 25 percent through Russian Technologies, and another 25 percent is controlled by Troika Dialog. Frederique Le Greves, a spokeswoman at Renault, said Friday that the company had no immediate comment.

The state has already spent 25 billion rubles ($844 million) to support AvtoVAZ, which Komarov said might lose 35 billion rubles ($1.2 billion) this year. Vneshekonombank, the state-run development bank, may buy as much as 40 billion rubles of the carmaker’s bonds, VEB chief executive Vladimir Dmitriyev said Thursday.

Renault, Nissan and AvtoVAZ will each introduce vehicles based on the joint platform in 2012, and Renault may produce a model exclusively in Russia for the local market, Komarov said. Renault, France’s second-biggest carmaker, owns 44 percent of Nissan, Japan’s third-biggest auto manufacturer, and the two companies cooperate on some parts, production and marketing.

AvtoVAZ plans to expand production of Lada Kalina cars as its “first priority” next year, with annual production of the models reaching 300,000 by 2013, said Igor Dubrovin, vice president for production. Development of a new midsize car has been put off until AvtoVAZ and its partners can evaluate how well the joint models are doing, he said.

Russian sales of new cars and light commercial vehicles fell 52 percent in September, compared with a year earlier, according to the Association of European Businesses. AvtoVAZ’s Lada remained the most popular brand, with sales of 28,109 last month. That’s a decline of 43 percent from September 2008.