STOCKHOLM (Bloomberg) – GAZ, the automaker controlled by billionaire Oleg Deripaska, aims to reach deals with General Motors Co. and Volkswagen AG by the end of next month to produce cars in Russia, GAZ CEO Bo Andersson said.
“The negotiations with Volkswagen and GM have been going well and I am convinced we can finish the talks with a positive result before the end of February,” Andersson said.
GAZ would make 30,000 to 40,000 Chevrolet Aveos for GM and about 100,000 cars for VW annually at its Nizhny Novgorod factory, said Andersson, a former GM purchasing executive, on Tuesday.
Fiat S.p.A., and OAO Sollers announced plans last February to create a 2.4 billion- euro ($3.1 billion) joint venture in Russia to build as many as 500,000 cars a year by 2016.
In December GAZ agreed plans with Daimler AG to produce Mercedes- Benz Sprinter vans for the automaker. Output may total about 25,000 units a year, Daimler said.
GAZ, the market leader in Russia for sales of light trucks and buses, stopped making its own passenger cars on Oct. 31 because its market share was too small and it was losing money on that business, Andersson added.
Russian car sales rose 80 percent in November, the highest in two years, as auto deliveries rebounded from a 49 percent slump in 2009. Russia's economy will probably return to pre-crisis levels by the end of 2011, a year earlier than planned, Finance Minister Alexei Kudrin said Dec. 29. Oil output set a post- Soviet record in 2010, the Energy Ministry said this month.
“It's sort of a race to try to build up a local supply base in Russia,” said Andrew Close, an analyst with IHS Automotive in London. “It's quite a sensible strategic move for these sorts of joint ventures to be pursued in Russia.”
GM is in talks with GAZ to produce cars in Russia, GM Europe spokesman Stefan Weinmann said in an e-mailed statement, declining to provide additional information. Volkswagen said Oct. 20 it was discussing “possible cooperation” with GAZ to expand production in Russia. VW didn't reply to requests for comment.
Striking production deals with foreign automakers is a way for GAZ to get money back on $500 million in investments made at the car plant, Andersson said.
“By doing this we'll fully utilize those investments,” he said. “Right now we have one of the most modern passenger car factories in Russia, and it's not being used.”
GAZ's sales rose 47 percent last year, Andersson said, declining to specify the amount or whether the company made a profit. Last October he said revenue in 2010 would be about $3 billion and that the company was likely to make a “very, very small” profit for the first time since 2007.
GAZ aims to boost sales from 20 percent to 25 percent this year and should post a “clear” profit, he added.