Russian Prime Minister Putin and carmaker Renault announced that the French car maker will save the Russian partner Avtovaz that builds Lada cars in Europe. Putin announced a 220 million GBP deal between Avtovaz and Renault, where Russia will increase its support for Avtovaz to enable the company to clear its debts. Renault will contribute in the form of technology, equipment, machine tools and expertise. Carlos Ghosn, Renault's chief executive, agreed to transfer technology and upgrade the Russian company's factories, but resisted pressure to increase its stake in AvtoVaz. Renault already bought 25 percent stake in February 2008.
According to the new business plan, Renault will also assemble Nissan models in Russia's Far East. In order to compensate transfer of technology worth £220m, the government will invest up to £1billion which will inject much needed funds to cash-stripped company.
Lada will replace Lada Classic and will introduce a new model. It will also step up its production capacity to 900,000 units annually at its plant at Togliatti in the Samara region of Russia. Renault and Nissan intend to build value cars at this plant later by 2012. Out of the total capacity, at least 650,000 units are expected to be Lada brand and rest may carry foreign car maker's badge.
