Renault considers third car plant in Russia

Renault is weighing a plan to launch vehicle production at a third site in Russia in partnership with its Japanese ally Nissan and its local affiliate Avtovaz, according to the Russian carmaker’s chief executive.

Avtovaz, in which the French carmaker holds a 25 per cent stake, is talking to Renault and Nissan about modernising and sharing a production line at a plant in the Ural mountains city of Izhevsk, Igor Komarov told the Financial Times.

“We haven’t completed the plans – we will do so in September or October – but I think we have a very good chance to develop other models, other cars on other platforms together with the alliance,” Mr Komarov said.

The cars will be built at Izhavto, an insolvent producer that Avtovaz is in talks to acquire by the end of the year from its majority owner and main creditor Sberbank.

Avtovaz plans to install capacity to produce more than 300,000 cars at Izhavto, about 100,000 of which will be derivatives of its forthcoming budget-priced Granta model, Mr Komarov said.
He said he hoped that the alliance would produce “a bit more than” 150,000 cars on the new line. The three companies could be building cars together at Izhavto by the end of 2013, he said, although he cautioned that they have not finalised plans.

Avtovaz also wants to work with Renault and Nissan to equip and modernise a second line that produces cars for all three carmakers, he said.

The planned expansion attests to both Renault’s ambitions for Russia and to revived fortunes at Avtovaz, the country’s biggest carmaker, which nearly collapsed during the financial crisis but is now recovering strongly with the broader car market.

Renault’s existing Avtoframos operation in Moscow, which makes four of the French producer’s models and plans to launch a fifth, is operating at full capacity and working on three shifts.
The French carmaker is also investing €400m ($576m) in Avtovaz’s home base of Tolyatti, including in a joint facility that is due to make two Lada models and one Nissan car in 2012 and two cars under its own brand by 2013.

Mr Komarov said that Avtovaz, whose Tolyatti hub is one of the world’s largest car plants, would be producing at full capacity of 1m cars by 2016. Together with Izhavto, Avtovaz aims to produce more than 1.4m cars by then.

Carlos Ghosn, Renault’s chief executive, aims to make Russia the French carmaker’s biggest market within five years, controlling 40 per cent of the market by 2016 with Nissan and Avtovaz, up from nearly 35 per cent now.