Renault May Join Nissan, AvtoVAZ in Creating Russian Cars

Renault SA (RNO), France’s second-biggest automaker, may join Japanese affiliate Nissan Motor Co. (7201) in developing models targeted at Russia once the companies complete a deal to buy a majority stake in OAO AvtoVAZ.

Renault may seek to make use of AvtoVAZ’s facilities to develop vehicles for the Russian market, Philippe Klein, head of the French carmaker’s product planning, said in an interview yesterday at the Geneva Motor Show. Nissan Chief Performance Officer Colin Dodge said at the show that the Yokohama-based carmaker will add three models built in Russia.

“We do have the situation in India, where we launched the Renault Pulse, and we leveraged the assets of Nissan in this region to expand our line-up,” Klein said. “We have a global strategy as well as this kind of pragmatic approach that we are undertaking when it makes sense.”

Russia’s car and light-truck market expanded 39 percent in 2011 to 2.65 million vehicles, and AvtoVAZ, the country’s biggest automaker, said on March 5 that its sales in February jumped 33 percent. Christian Klingler, sales chief at Volkswagen AG (VOW), said in Geneva yesterday that Russia, along with China and the U.S., will help keep global auto-industry growth at a “low single-digit” rate this year as Europe’s market shrinks.

Shares Rise

Renault gained as much as 1.8 percent to 38.72 euros and was trading up 1.4 percent at 38.56 euros at 12:06 p.m. in Paris. The stock has jumped 44 percent this year, valuing the carmaker at 11.4 billion euros ($15 billion).

The French manufacturer, based in the Paris suburb of Boulogne-Billancourt, already owns 25 percent of AvtoVAZ. The Renault-Nissan alliance expects to conclude an agreement with AvtoVAZ’s top two Russian shareholders to buy a controlling stake in the automaker in coming weeks, Carlos Ghosn, head of Renault and its Japanese partner, said in Geneva yesterday.

The process of expanding the stake in Togliatti-based AvtoVAZ will probably accelerate now that Russia’s presidential elections are finished, Ghosn said.

The three partners will produce cars from a joint platform used for Renault’s Dacia Sandero and Logan models, Klein said.

Carmakers undertaking projects in Russia include Turin, Italy-based Fiat SpA (F), which signed a letter of intent in February with Moscow-based Sberbank to set up an 850 million-euro, jointly owned factory with capacity for 120,000 vehicles that may also involve U.S. brand Chrysler, and Ford Motor Co. (F), which is scheduled this year to introduce sport-utility vehicles made with local partner OAO Sollers.

Luxury-Model Strategy

Renault’s model plans include adding three luxury vehicles to its line-up, including a new version of the Espace minivan scheduled to go on sale in 2014. An expanded luxury line-up is essential to sustain fleet sales to corporate customers, Jerome Stoll, Renault’s sales chief, said in an interview at the show.

An executive car based on a platform from partner Daimler AG (DAI)’s Mercedes-Benz brand is being evaluated, Klein said, declining to specify a model. The Mercedes-Benz E-Class, priced starting at 39,835 euros ($52,400), is the flagship executive car for Stuttgart, Germany-based Daimler, the world’s third-biggest maker of luxury vehicles.

The third high-end model Renault is considering would be based on an updated platform now used for the Nissan Qashqai and Renault Koleos sport-utility vehicles, according to Klein and Nissan performance chief Dodge.

The Japanese carmaker’s Infiniti luxury unit isn’t helping Renault develop the vehicle, Dodge said in an interview.

Infiniti has already worked on feasibility studies for a hatchback and sedan to be produced jointly with Mercedes-Benz, Dodge said. Such collaboration would add to the engines the two companies plan to build in Tennessee starting in 2014.

To contact the reporters on this story: Alex Webb in Geneva via 146 or awebb25@bloomberg.net.

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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