GM to form joint venture in Russia

General Motors is in the process of creating a car-building project in Russia in cooperation with Russian automobile manufacturer AvtoVAZ.

General Motors is in the process of creating a car-building project in Russia in cooperation with Russian automobile manufacturer AvtoVAZ and the London-based European Bank for Reconstruction and Development (EBRD).

The joint venture will be located at the AvtoVAZ plant in the city of Togliatti. GM and AvtoVAZ will each hold a 41.5 percent stake in the joint venture and the remaining 17 percent share will be contributed by the EBRD, subject to final approval by its Board of Governors in March and finalization of all agreements.

The project, which represents a total investment of $332 million, is tailor-made for the Russian market, which is forecasted to have a high demand for reasonably priced, robust vehicles. Based on the engineering expertise of AvtoVAZ and their latest version of the Niva sport utility vehicle, it is planned that the joint venture will build around 75,000 Niva units annually. The vehicles will be sold in Russia under the Chevy brand. The start of production is planned for 2002. Full capacity should be reached in 2004.

GM contributes around $100 million of the $332 million investment to set up the new plant at the AvtoVAZ premises in Togliatti, about 1,000 kilometers southeast of Moscow. The same share comes from AvtoVAZ, which provides intellectual property, tools and facilities, and the remaining investment is supplied by the EBRD.

Last year, about one million new passenger and light commercial vehicles were sold in Russia, with imports accounting for less than 5 percent of the market.

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