General Motors Corp. has lost out to French rival Renault SA in the bidding to acquire a major stake in Russia's largest automaker, OAO AvtoVAZ.
The deal gives Renault a boost in the rapidly growing Russian market and leaves GM on its own to increase its manufacturing presence in the region.
A Renault spokeswoman said Friday that a deal had been agreed to with state-controlled AvtoVAZ.
Renault's CEO, Carlos Ghosn, was expected to attend a press conference today at AvtoVAZ headquarters in the Russian city of Togliatti.
“I can confirm that AvtoVAZ has selected Renault,” said Claire Martin of Renault in Paris.
Details of the acquisition were not made public, but Russian media reports said that Renault would buy a 25 percent stake in AvtoVAZ, valued at about $1.4 billion.
There was no comment from GM, which had said Tuesday that it was interested in a significant stake in AvtoVAZ.
GM has tapped into the explosive growth in auto sales in Russia mostly with imported vehicles, which carry a high tariff that increases prices. Last year, GM's sales in Russia soared 73 percent to 132,600 vehicles.
“We're experiencing enormous demand for our products,” Mark Kempe, a GM spokesman in Europe, said Tuesday. “We're exploring a variety of ways to meet this demand.”
International growth has become a top priority at GM as the automaker tries to offset its stagnant market share and money-losing operations in North America.
One critical target is Russia, where new-car sales increased 20 percent in 2006.
GM already builds about 50,000 Chevrolet-branded cars and SUVs annually in Russia in a joint venture with AvtoVAZ. But the venture has been troubled by disputes among the partners that triggered a 10-day production shutdown last year.
GM has already broken ground on its own assembly plant near St. Petersburg, and it has a small production venture in Kaliningrad on the Baltic Sea.
The new plant, however, will have an initial full-year production capacity of only 25,000 vehicles when it opens in late 2008.
At a groundbreaking ceremony last year, GM Chairman Rick Wagoner said the new plant “clearly demonstrates our commitment to Russia as one of the world's fastest growing auto markets.”
Other major automakers are also planning to assemble vehicles in Russia, including Ford Motor Co., Toyota Motor Corp. and Nissan Motor Co. Chrysler LLC has been in talks with another Russian automaker, GAZ, about a production deal.
