Renault-Nissan and the state run Russian Technologies corporation have signed an agreement to create a joint venture that will get a majority stake in Russian car maker Avtovaz.
The new joint venture has been named Alliance Rostec Auto BV. Under the terms of the deal, the Franco-Japanese alliance will invest $742 million to take control of Avtovaz through a 67.13% stake in the joint venture by mid-2014. The joint venture will then own 74.5 per cent of Avtovaz. Renault-Nissan will have eight seats on an expanded board of 15 members, up from 12. In 2014, Alliance Rostec Auto plans to take over the Avtovaz stake that currently belongs to Troika Dialog Investments.Renault-Nissan has already invested $2 billion into Avtovaz, and the Alliance expects a return of the investment over three years, the President of Renault-Nissan alliance Carlos Ghosn told RT.“We are ready to work with Avtovaz because we see huge opportunities, because the Russian market will continue to grow and instead of building new capacity in other places let’s join forces with Avtovaz to dedicate capacity of Togliatti and benefit from existing suppliers,” he said.Carlos Ghosn will chair Alliance Rostec Auto BV's board, while Renault's Financial Director Dominique Thormann, Nissan's Financial Director Joseph Peter, and Senior Vice President of Renault and the company's chief in Russia Bruno Ancelin will take seats on the new JV board.Russian Technologies will hold a 32.87% stake in the joint venture. Russian Technologies chief Sergey Chemezov will keep his seat as the chairman of Avtovaz's BoD and will represent interests of Avtovaz at Alliance Rostec Auto’s board along with his deputy Igor Zavyalov.The deal comes six months after a $525 million assembly complex in Avtovaz’s Togliatti factory was opened, adding capacity for up to 350,000 cars per year. With the new facilities, the factory has a capacity to produce more than 1 million cars per year. Avtovaz has already started production of Nissan Almera models, but the newly created alliance also plans to strengthen Russia’s Lada cars.“It’s important to strengthen the brand because Russian consumers want a Russian brand, but they want a modern product,” Ghosn told RT. “The Lada brand is an asset with a strong Russian identity. We want to keep it this way but the brand’s identity should be supported by a product, responding to the needs of consumer.”