Renault-Nissan to Take Control of Russia’s AvtoVAZ

Renault-Nissan has finalized the creation of a joint venture with Russian Technologies State Corp. that will give the French-Japanese alliance a controlling interest in Russia's largest automaker OAO AvtoVAZ.

That control will allow Renault-Nissan to pool the results of the maker of Lada cars with its own. The three automakers share four assembly plants in Russia that are expected to reach combined annual capacity of at least 1.7 million cars in 2016.

The trio aim to hike their share of Russia's auto market to 40% by 2016 from a combined 30.5% this year. Renault-Nissan plans to use its technology and product expertise to upgrade the Lada brand, which is known for low-quality, clunky and outdated models.

Renault-Nissan, which owns 25% of AvtoVAZ, will buy an additional 25% stake from Russian investment firm Troika Dialog over the next two years for 23 billion rubles ($750 million). Russian Technologies already owns 24.5% of the carmaker.

Renault-Nissan and Russian Technologies will pool their combined 74.5% of AvtoVAZ equity in the new venture, called Alliance Rostec Auto BV. Renault-Nissan CEO Carlos will be chairman of the joint venture, which will be 67.1% owned by Renault-Nissan and 32.9% by Russian Technologies.

The deal will give Renault-Nissan control of the majority of AvtoVAZ's 15-member board. Russian Technologies CEO Sergey Chemezov remains AvtoVAZ chairman but will begin alternating in that post with Ghosn next June.