MOSCOW — Russia's AvtoVAZ and the Renault-Nissan alliance are planning to build a new car line in the Far East of the country, according to Russian media reports.
The launch of the project is scheduled for 2011-'12, and according to the initial plans of the companies, the new plant will specialize in the production of two Renault models, two Ladas and one model under the Nissan brand name.
According to Sergei Chemezov, head of technology corporation Rostekhnologii and one of the signers of the deal, the Renault-Nissan alliance will churn out the Nissan and Renault models in Russia's Far East as part of the AvtoVAZ restructuring deal.
Under the terms of the agreement, Renault will pledge the equivalent of $438.2 million, but so far not in cash. It will share technology and know-how, but the burden to reimburse the carmaker's debt and cash needs will remain on the shoulders of the Russian government.
The deal calls for a $2.5 billion AvtoVAZ bailout from the Russian government and technology transfer by Renault-Nissan.
The current size of the Russian Far East car market is about 300,000 cars a year, and now, when the importation of used cars from Japan has become unprofitable due to high customs duties, the establishment of the assembly plant in the region will allow the automaker to meet local demand for new cars.
This will be the second major auto project in Russia's Far East. Another Russian automaker, Sollers, previously announced that it will start the construction of an assembly plant in Vladivostok, which will specialize in the production of Ssangyong SUVs and commercial vehicles under the Fiat and Isuzu brands.
Inside Line says: Restructuring, Russian style. — Evgeniy Vorotnikov, Correspondent
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