PARIS - Renault has formed a 50-50 joint venture with the City of Moscow to build Megane sedans starting in 1998. Planned output is 120,000 vehicles a year by 2005.
Renault will invest $350 million for a new body shop, paint shop and assembly line. Moscow will supply the plant, and Renault will operate it. Moscow controls AZLK, the maker of Moskvich cars.
Output is expected to be 10,000 units in 1999 and 65,000 in 2001 when a second model is added.
Renault wants to control 10 percent of the Russian market, which it expects to grow to 1.2 million units in 2002 from 760,000 now.
'What we want to manufacture in Russia is a world-class vehicle,' said Renault Chairman Louis Schweitzer. He and Moscow Mayor Yuri Louzhkov plan to sign final agreements by the end of the year.
The joint venture will also manage Renault's Russian dealerships. Renault plans to expand from six now to 20 next year.
Moskvich will supply stampings to Renault. Renault will advise Moskvich on technology and the venture may paint Moskvich cars.
Moskvich has not yet secured finance for its intended purchase of 40,000 2.0-liter Renault engines.