Daimler, GM Talk Deals With GAZ

Just the Facts:

• Daimler is considering partnering with GAZ to build the Mercedes-Benz E-Class in Russia.
• Production is expected to be launched at the Gorky Automobile Plant in Nizhny Novgorod.
• E-Class would replace the current assembly of the Volga Siber, a car based on the old Chrysler Sebring.

NIZHNY NOVGOROD, Russia — German automaker Daimler is considering establishing the production of Mercedes-Benz E-Class cars in partnership with GAZ Group, Russia's largest automotive engineering holding.

Production is expected to be launched at the Gorky Automobile Plant in Nizhny Novgorod and may replace the current assembly of Volga Siber cars, which is estimated at 100,000 cars a year. The Siber is based on the previous-generation Chrsyler Sebring sedan.

A source close to the project said that the companies are continuing talks on the financial side of the project, without disclosing expected volume of production.

Russian analysts said cooperation with GAZ could be beneficial to Daimler, which intends to compete more directly with its main rival BMW in Russia.

At the same time, in addition to Mercedes-Benz, GAZ Group is considering several other potential partners. There is a possibility that the Russian plant may start the production of the Tata Indica car or some models from General Motors.

In the case of GM, according to sources in GAZ Group, the company has already had talks with the U.S. company.

So far, GM has three production sites in Russia. In 2008, its launched its plant in St. Petersburg, which specializes in the production of two Chevrolet and two Opel models. Since 2002, the group, in cooperation with AvtoVAZ, has produced the Chevrolet Niva model. The U.S. company has also licensed production of several models at the Avtotor plant in Kaliningrad.

Inside Line says: GM could have an inside track, now that Bo Anderson, its former head of worldwide purchasing, is chairman of GAZ. — Evgeniy Vorotnikov, Correspondent