* The management of Russia's leading automotive concern AvtoVAZ has decided the Russian car market must stay Russian and refused to sell a blocking stake in their plant to Renault. Experts told the paper this had put an end to a joint venture with the French concern. Instead AvtoVAZ is planning a new C-class car platform with Porsche Engineering Group.
"AvtoVAZ will not sell its shares to France's Renault," Vladimir Artyakov, AvtoVAZ chairman, said on Friday. "We have looked at the situation [with Renault] purely from an engineering point of view," he said. "AvtoVAZ was only interested in the joint development with the French of a new platform, and it is now being negotiated," an AvtoVAZ top manager explained Artyakov's words.
Negotiations between AvtoVAZ and Renault were initiated by former AvtoVAZ head Vladimir Kadannikov. After they took over at the plant in December, Rosoboronexport managers resumed them in spring. In June, Artyakov visited Paris to talk with Renault Nissan president Carlos Ghosn. Renault offered to buy no fewer than 25% of Russian shares, promising to set up a joint venture to assemble 450,000 cars a year based on its cheapest model, the Logan.
Experts said the offer was highly attractive for AvtoVAZ. Deutsche UFG, in a special report, highlighted the benefits such as access to modern technologies and "advanced Western management experience." But selling a blocking stake would have meant giving up control of the Russian car market to foreigners, Igor Yesipovsky, AvtoVAZ director-general, told Vedomosti. He said AvtoVAZ had better offers than the Logan.
Another source close to AvtoVAZ said the management was not pleased either with Renault's bid to purchase the shares at market price. On Friday, the plant's RTS capitalization stood at $1.7 billion, and the AvtoVAZ and Rosoboronexport managements thought it was underestimated.
AvtoVAZ is not fixated on Renault, however. In spring the plant had talks with PSA Peugeot Citroen, and is now thrashing out a deal with Porsche Engineering Group (PEG) to develop a new C-class car platform and a matched engine, a source in the AvtoVAZ management told the paper.
PEG had a hand in developing the VAZ Model 8. Porsche is also expected to undertake the engineering of further models, another top manager of the auto concern added. Besides, Rosoboronexport chief Sergei Chemezov prefers the option of cooperation with Porsche, the Rosoboronexport top manager told Vedomosti. Porsche would not comment on its client relations, a company spokesman said. Renault likewise declined to comment on Artyakov's and Yesipovsky's statements.
But experts told the paper they were certain that the French deal was off. The purchase of shares would have guaranteed Renault a role in putting together an AvtoVAZ strategy and pricing policy, said Aton analyst Tatyana Kapustina.
Sergei Alekseichuk, an independent car market expert, said that the Logan was a direct rival for Lada models and the French should take the view that it would be pointless helping a competitor free of charge and sharing technologies with it.
Kapustina said ideology was behind the refusal to sell : AvtoVAZ managers are hugging the idea of a national car. This, she says, is a mistake, because it is always better to buy a ready-made model than spend good money on development. A spokesman for one of the auto groups estimates that every model developed from scratch with Porsche will cost AvtoVAZ minimum $300 million.