Renault-Nissan Alliance Sets Up AvtoVAZ Procurement Group

Renault SA (RNO) and partner Nissan Motor Co. created a parts-procurement venture with OAO AvtoVAZ (AVAZ), Russia’s biggest carmaker, as the manufacturers seek to limit costs as they expand in the country in a three-way tie-up.

The venture is modeled on the 12-year-old Renault-Nissan Purchasing Organization, which holds a 50 percent stake in the new Russian entity, with Togliatti-based AvtoVAZ (AVAZ) owning the other half, the companies said in a joint statement today.

Renault, France’s second-biggest carmaker, and Yokohama, Japan-based Nissan are in the process of acquiring control of AvtoVAZ, the maker of Lada vehicles, under an agreement signed late last year that pledges the buyers to invest 23 billion rubles ($713 million). Renault Chief Executive Officer Carlos Ghosn, who also runs Nissan and is chairman of AvtoVAZ’s board of directors, has targeted a 40 percent combined market share in Russia for the three companies by 2016.

The three manufacturers are planning joint annual production capacity in Russia of 1.7 million vehicles by that year, Mia Nielsen, a spokeswoman for the Renault-Nissan Alliance, said today in an e-mail. Renault, which is based in the Paris suburb of Boulogne-Billancourt, has been Nissan’s partner in sales and production since 1999 and currently owns about a 43 percent stake.

Eight-month Russian deliveries by Renault, Nissan and AvtoVAZ fell 9 percent from a year earlier to 533,822 vehicles, according to figures compiled by the Moscow-based Association of European Businesses in Russia. Their combined market share narrowed to 29.7 percent from 30.3 percent.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

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

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