renaultnissan to grab major share of avtovaz
Last Updated : GMT 06:41:18
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Renault-Nissan to grab major share of Avtovaz

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Arab Today, arab today Renault-Nissan to grab major share of Avtovaz

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Avtovaz means little to Australians, but mention Niva or Samara and the penny will drop in the minds of local enthusiasts — Lada. The Russian car manufacturer (Soviet, actually, at the time) sold its products here under the Lada name throughout the 1980s and 90s, but fell on tough times as newer designs from Korea began to find a foothold in Australia. Avtovaz has continued to build cars in Russia for the domestic market in the interim. Since 2008 Renault has owned 25 per cent of the company and now the French firm and its Japanese ally, Nissan, will take a larger stake in the Russian manufacturer. It's a complex process however, so pay attention... Renault and Nissan will invest roughly US $750 million in a joint venture with a company named Russian Technologies, a state-owned Avtovaz creditor. By holding a major share in the joint venture (67.13 per cent), the Renault-Nissan Alliance will indirectly hold a major share in Avtovaz as well. The joint venture's interest in Avtovaz will be 74.5 per cent. Renault exclusively owns 25 per cent of Avtovaz already, since 2008. Russian Technologies will restructure its debt as its contribution to the joint venture. Avtovaz will offload "non-core assets" worth US $238 million to pay back Russian Technologies on outstanding loans. The balance of the loan amount owed Russian Technologies by Avtovaz (US $1.56 billion) is interest-free and "extended well beyond its current maturity date". Sounds more like a gift than a loan... The joint venture will acquire Russian investment company Troika Dialog’s entire stake in Avtovaz by 2014. Nissan has not previously owned any part of Avtovaz, but will be contributing US $450 million of the investment in the joint venture. Renault is contributing the balance of US $300 million. The Renault-Nissan Alliance will make periodic payments throughout 2014. A memorandum of understanding between the Renault-Nissan Alliance and state-owned Russian Technologies has been signed. It's expected the full financial transaction will be concluded in 2014. “Today’s memorandum is the latest step in an expanding collaboration that helps modernise the leader of Russia’s auto industry,” said Renault-Nissan Alliance Chairman and CEO Carlos Ghosn. “Just as Renault and Nissan will continue their technology transfer to Avtovaz plants, our Avtovaz colleagues will contribute more and more to the Alliance’s multicultural management bench.” “We are very pleased to allow Avtovaz to further strengthen its ties with the Renault-Nissan Alliance and to welcome Nissan as a new strategic partner in Avtovaz,” said Sergey Chemezov, Russian Technologies General Director and Chairman of the Board of Avtovaz. “The joint venture between Russian Technologies and the Alliance is another testimony to our remarkable progress in implementing our shared vision for Avtovaz and the Lada brand.” Avtovaz is already Russia's largest car manufacturer. Russian Prime Minister Vladimir Putin (pictured at the wheel of a Lada Granta) recently "inaugurated" a new assembly complex at the manufacturer's Togliatti site in Russia. The investment, worth US $525 million, provides additional capacity of 350,000 cars per year, taking total annual output to nearly one million units. All current Lada models will be updated with assistance from Renault and Nissan under this new agreement. “Avtovaz welcomes this agreement between our core shareholders. The company believes the Renault-Nissan Alliance and Russian Technologies shared vision for Avtovaz is a key enabler of our future success,” said Avtovaz CEO Igor Komarov. “Both core shareholders will continue to bring the support the company needs as it undergoes its biggest transformation plan ever. The Avtovaz management team and our partners within the Alliance will continue to accelerate our integration and joint projects.” Russia is the 'R' in 'BRIC' — the four nations that are rapidly emerging in today's global economy: Brazil, Russia, India and China. These four have kept otherwise struggling car manufacturers afloat throughout the Global Financial Crisis and since then. Into the future, car companies heavily invested in Russia and the other three BRIC nations will thrive, based on sales volumes in those markets. According to press material supplied by Renault, Russia is the fastest growing economy in Europe and is likely to remain dominant for decades to come, due to the sudden growth in well paid consumers. Over 10 million Russian households are already earning in excess of US $50,000 a year. Motor vehicle sales in Russia last year topped 2.65 million units and the forecast for 2012 is 2.9 million. The Renault-Nissan Alliance sold 878,990 cars in Russia during 2011, of which 578, 387 were Ladas. 

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