MOSCOW –- Renault CEO Carlos Ghosn will receive a feasibility study next month on a partnership with AvtoVAZ, Russia's largest carmaker.
Renault is seeking more production capacity in Russia, where its locally made low-cost Logan is a sales success.
Cash-strapped AvtoVAZ needs help from Western auto companies to develop new models. Its aging Ladas struggle to compete in the booming Russian market against European and Asian cars.
Despite media reports to the contrary, selling a stake in AvtoVAZ to a foreign company is out of the question, company spokesman Ivan Skrylnik told Automotive News Europe.
"Foreign makers are not interested in promoting Lada cars here," Skrylnik said. "They might start dictating their terms."
AvtoVAZ has yet to explain how it will reach its goal to develop and manufacture a dozen new models in the next few years, analysts note. Despite its need for investment and Western expertise, AvtoVAZ is determined to remain a Russian-owned national champion.
Skrylnik's comments came after AvtoVAZ General Director Igor Yesipovsky unexpectedly resigned on July 29.
Some local media reports said Yesipovsky was forced out because he opposed cooperation with Renault. Others said it was because he had accomplished little in seven months on the job.
Renault is preparing a feasibility study of a possible deal to present next month to Ghosn and other executives, spokesman Andrew Boyle told ANE.
The French carmaker said in June that it would increase annual production capacity at its Avtoframos factory in Moscow to 80,000 units from 60,000 starting in 2007. The plant makes the Logan from knockdown kits supplied by Renault's Dacia subsidiary in Romania.
Renault also said it was looking into various other options to boost capacity because of the Russian market's high potential.
With its budget Logan model designed for developing markets, Renault is targeting the same customers as AvtoVAZ.
AvtoVAZ no longer dominates Russia's car market, but it still held a 45 percent market share in 2005.
"AvtoVAZ is rather a big concern to team up with for many players," said Paul Nieuwenhuis, deputy director at the Centre for Automotive Industry Research at the Cardiff Business School in Wales.
General Motors knows what Nieuwenhuis is talking about. GM's joint venture with AvtoVAZ has been in trouble since state arms trader Rosoboronexport took over AvtoVAZ in December. The carmakers produce the Chevrolet Niva SUV and Viva lower-medium sedan in Togliatti.
GM will open its own plant in St. Petersburg in late 2008 to build 25,000 units a year of the Chevrolet Captiva SUV and an unnamed small car.
Volkswagen, Toyota and Nissan also are building their own plants in Russia.