Renault-Nissan prepared to invest in AvtoVAZ

The Board of the major Russian automaker AvtoVAZ in Togliatti has approved the investment plan to 2020. It is worth 3 billion Euros. This amount can be sum of investments from different sources, in particular as credits or state guarantees of the Russian government, and possibly some market stimulation steps, plus technologies and equipment that AvtoVAZ partners Renault-Nissan can provide.

According to its business plan AvtoVAZ is poised to increase its output four-fold, from the current 295,000 a year to 1.2 million cars by 2020. A transfer of the plant making budget Renault cars from Moscow to Togliatti is being discussed. Its share-holders Renault and Rostekhnologii plan to make an additional emission of their shares to the tune of 960 million Euros, hoping to raise 320 million Euros at its first stage this year. The share of its third share-holder, Troika-Dialog will become smaller. Renault is expected to buy 25% of the additional emission, not for money, but by their technologies and equipment. This is a precious contribution, says Dmitry Chumakov, general director of Vector Market Research consultancy: “After the disastrous period of crisis it is much easier for Renault-Nissan to make their contribution in the form of technologies. It does much more good than money to AvtoVAZ, as very-very few automakers are willing to offer their technologies and know-how to others. Our plant is a strategic asset for Renault-Nissan, so this company is prepared to share the most precious things it has – their technologies.”

Rostechnologii with its 75% of AvtoVAZ shares will invest 340 million Euros, also not in cash but converting the plant’s debt to it. This way the plant’s debt of 37 billion roubles will be reduced to 27 billion.

 “Renault has invited it to take part in the emission, so the company will have to be in this scheme, it seems, and the share of Rostekhnologii after the additional emission will grow from 25% to 44%.”