Russia is one emerging market that is growing very, very fast. The country is poised to become Europe’s second-largest market within the time span of a couple of years. Sales of more than 2.2million cars and light trucks are expected by the end of this year. No wonder GM wants to increase its presence in the market.
GM is looking for a substantial stake in its Russian manufacturing partner, the state owned AvtoVAZ. AvtoVAZ produces close to 700,000 vehicles a year, including Lada cars. A joint venture of GM and AvtoVAZ produced nearly 1,500,000 Chevrolet badged cars in the past three years. Relations between the two partners are not on the best of terms, while the Russian car market increased by 30% and sales of GM jumped by a whopping 73%, AutoVAZ’s sales increased by less than 1%.
AvtoVAZ needs scale and technology to remain in a market that is seeing a huge influx of automakers from around the world. After a dispute with AvtoVAZ last year that led to 10-day production line halt, GM started to build its own plant near St. Petersburg. GM is not alone; Ford, Nissan and Toyota are also busy building their plants on the outskirts of St. Petersburg.
GM has placed an undisclosed bid for a major stake in Russia’s largest automaker. Media reports say AvtoVAZ has floated a possibility of 25% sale of the company, with Fiat and Renault included in the list of potential bidders, the company is expected to pick its strategic investors including a foreign manufacturer, in a few weeks.
The war for control of this lucrative market is just revving up, there are likely to be lots of twists and turns in the tale of this strong auto market.
[Source: TheDetroitNews] Image
