The Renault-Nissan alliance will form a joint venture with Russian Technologies Corp. to become the largest shareholder in AvtoVAZ, Russia's biggest automaker.
Renault and Nissan will together invest about $750 million to take a majority holding in the joint venture, which will in turn own 74.5 percent of AvtoVAZ, the companies said today.
The investment will include about $300 million from Renault and the remainder from Nissan. Renault already purchased 25 percent of AvtoVAZ for $1 billion in 2008.
The companies aim to complete the deal by mid-2014.
Carlos Ghosn, who runs both Renault and Nissan, is looking to the maker of Lada brand vehicles to fuel growth in Russia, where the market may reach 4 million annual sales in 2015, surpassing Germany to become Europe's biggest, as rising incomes and a surge in consumer spending drive consumers toward showrooms.
Last year, 2.65 million cars and light commercial vehicles were sold in the country, with the market expected to reach 2.9 million this year.
AvtoVAZ aims to hold 25 percent of the Russian auto market in five years, or 40 percent together with Renault and Nissan. With a combined share of nearly 33 percent currently, Russia is the alliance's third-largest market after China and the United States.
'Positive' for Renault
"We see this move as very positive for Renault, which will continue to heavily invest in this growing market," said Xavier Caroen, an analyst at Kepler Capital Markets, in a note to clients today. "With AvtoVAZ and Nissan, the group will officially become the leader in Russia."