Renault-Nissan Finalize Deal to Gain Control of AvtoVAZ

The Renault-Nissan alliance plans by 2014 to form a new venture with Russian Technologies Corp. that will own 74.5% of OAO AvtoVAZ, Russia's largest carmaker.

Renault Nissan already owns 25% of Lada-maker AvtoVAZ. State-owned holding company Russian Technologies owns another 25% stake. The partners plan to buy AvtoVAZ shares held by investment firm Troika Dialog to achieve 74.5% ownership.

Renault-Nissan says it will spend about €569 million to buy the stock. AvtoVAZ CEO Igor Komarov, who signaled the impending partnership in December, said in April that the company intends to borrow as much as 60 billion rubles (€1.5 billion) over four years to bankroll an overhaul of the company's product line.

Lada currently captures about 22% of Russia's auto market and has been losing share to such rivals as Chevrolet and Hyundai. Renault, Nissan and AvtoVAZ have said they aim to boost annual sales to 1.6 million and grab 40% of the market by 2016. That plan reportedly includes producing seven new models that will be sold under each partner's brand.

The three companies intend to expand AvtoVAZ's plant in Togliatti to an annual capacity of 1.2 million vehicles by 2017.