Russia's GAZ group may expand alliances with GM, VW

COLOGNE, Germany -- Russia's GAZ group will not return to selling cars under its own brand and may instead expand its production partnerships with Volkswagen AG and General Motors Co., Bo Andersson, GAZ president said.

GAZ will benefit from Russia's exploding growth in new-car sales by being a contract manufacturer, Andersson told Automotive News Europe in an interview.

"It's not worth it for us to build up a car brand. We have Russia's most effective car plant and will use it to build vehicles for other manufacturers," he said.

"VW and GM have told us they would like to have more capacity as the market expands," Andersson added.

He was speaking Thursday at the Automotive News Europe Congress in Cologne, Germany.

The Russian car market is expected to pass Germany's as Europe's largest car market, as sales to climb 73 percent to more than 3.3 million in 2015, according to forecasts from Russia's Ministry of Industry.

GAZ, which formerly built Volga cars, is Russia's No. 1 maker of light commercial vehicles, trucks and buses but has just 1 percent of the passenger car market.

Earlier his month, VW said it will invest 200 million euros in expanding and modernizing the GAZ car assembly factory in Nizhny Novgorod. GAZ will build the Volkswagen Jetta, and Skoda Octavia and Skoda Yeti models for the Russian market. The Yeti small SUV will be the first model to begin production by the end of 2012.

In February, GM and GAZ signed a deal for GAZ to assemble 30,000 Chevrolet Aveo sedan and hatchbacks a year in Nizhny Novgorod, with production scheduled to begin in mid-2012.

Andersson has returned GAZ to profit since he joined the group from GM, where he was purchasing and supply chain chief. GAZ was close to bankruptcy before a government bailout in 2009 but reported a 2010 net profit of 2.1 billion rubles ($74.34 million).

Andersson was named Russia's Automotive Executive of the Year at an international automotive forum organized by Adam Smith Institute in Moscow earlier this year.