Renault announced today a strategic partnership with the Russian car manufacturer AvtoVAZ. The Renault AvtoVAZ partnership will allow AvtoVAZ to accelerate the development of its vehicle range and to grow the Lada brand while preserving its identity. The main shareholder of AvtoVAZ is currently Russian Technologies. Russian Technologies will still keep an interest in AvtoVAZ’s capital and ensure continuous support from the Russian State.
Renault Press Release:
RENAULT BECOMES THE STRATEGIC PARTNER OF AVTOVAZ
• Sergey Chemezov, Head of Russian Technologies, Chairman of the Board of AvtoVAZ, Serguei Skvortsov, President of Troika Capital Partners and Carlos Ghosn, President and CEO of Renault signed on December 8, 2007 a Memorandum of Understanding (MOU) in Togliatti, Russia.
• This partnership would allow AvtoVAZ and Renault to:
o Accelerate the development of AvtoVAZ, renew and expand its vehicle range
o Grow the Lada brand while respecting its identity, in order to maintain its leadership
o Share technological expertise and know-how
• Russian Technologies, currently representing the main shareholder of AvtoVAZ, would keep an interest in AvtoVAZ’s capital and ensure continuous support from the Russian State.
Russian Technologies and Renault would become equal shareholders of AvtoVAZ in the spirit of a long-term partnership. Once the capital of AvtoVAZ has been restructured in the first half of 2008, a holding equally owned by Russian Technologies and Renault would control a total of 50% of the shares of the company (AvtoVAZ). Renault would become a significant AvtoVAZ shareholder.
AvtoVAZ and Renault would share know-how and technology particularly in relation to manufacturing and marketing and with the aim of improving the attractiveness, competitiveness and overall quality of AvtoVAZ’s products. They would also exchange executive managers in various fields of expertise in order to optimise integration and boost the transformation of AvtoVAZ into a global automotive player with a capacity of well over 1 million vehicles per year.
The partnership would also include cooperation in relation to engines and gearboxes with the view
to equip both AvtoVAZ and Renault vehicles.
This investment should also significantly contribute to enhancing Renault and the Renault- Nissan Alliance’s competitive position on the Russian market.
AvtoVAZ would benefit from Renault’s contributions in relation to platforms and powertrains which are expected to help the company to renew faster and enhance the entire Lada product line. This would apply to AvtoVAZ’ C-segment project.
Russia should become Renault Group’s main market as a result of the partnership. Sale volumes of Lada vehicles, in agreement with AvtoVAZ and its
shareholders, will be consolidated by Renault. Consequently, sale volumes represented in Renault’s Commitment 2009 will be revised upwards.
This agreement punctuates a long and transparent selection process that led to Renault’s offer being considered competitive financially and the best from an industrial and technological viewpoint.
About AvtoVAZ
AvtoVAZ is one of the biggest car makers in Europe and the leading auto manufacturer in Russia, controlling around 70% of domestic car production. Company manufacturing capacities allow for production of over 1 000 000 cars annually. The company features models such as the LADA-ELFI (a miniature city car), the VAZ-1111E (a four-seat electric car), the VAZ-2115 (sedan), and the Niva 2131(an all-wheel drive SUV). The company has a $330 million joint venture with General Motors – GM AvtoVAZ -- to manufacture the Chevy-Niva SUV and Chevy Viva cars. AvtoVAZ and GM each hold a 41.5% share in the venture, while the European Bank for Reconstruction and Development owns the remaining 17%. In 2006, AvtoVAZ’s net profit was 2 512 million rubles (70.5 million euros), up by 79,4% from 2005.
About Renault and the Alliance in Russia
Renault is a global automotive manufacturer selling 2.5 million vehicles worldwide (2007 forecast including 100 000 in Russia).
Renault, together with Nissan, its strategic partner in the Renault Nissan Alliance, is the fourth biggest manufacturer worldwide with 6.3 million cars forecasted for 2007.
Both companies are developing quickly on emerging markets and have already announced in 2007 important joint projects in India and Morocco.
Renault was established in Russia in 1905, created the Avtoframos company in 1998 in partnership with the City of Moscow, began production in its Moscow plant in 2005, and announced in 2007 that the plant’s capacity would be doubled.
Nissan’s production site in Saint Petersburg is under construction.
This partnership with AvtoVAZ would open new development opportunities for Renault and for the Alliance on the Russian market, as well as component sharing activities.
Renault Commitment 2009
… is a growth plan whose ambition is to make and sustain Renault as the most profitable European volume car company. The three major commitments are:
• Quality: Position the next Laguna, which was launched in October 2007, among the top three models in its segment in terms of product and service quality;
• Profitability: Achieve an operating profit margin of 6% in 2009;
• Growth: Sell an additional 800,000 units in 2009 as compared to 2005.
