Vive les Ladas

11 November 2010 By Jason Bush

The French car company is in talks to gain control of Russia’s AvtoVAZ, upping its stake from 25 to 50 percent. The indebted maker of the Lada may not look that appetising. But if Renault is right about the Russian market’s growth potential, there may be method to the madness.

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Russian prime minister Vladimir Putin said earlier this month that the Russian government would support Renault, the French carmaker, taking a controlling 50 percent plus one share stake in AvtoVAZ. The French company's CEO Carlos Ghosn called the offer "absolutely logical" for RenaultNissan, saying that the group would consider it "with pleasure", but would first need to discuss the terms with Renault shareholders.

In an interview with Russia Today television channel on Oct. 27, Ghosn said that RenaultNissan was in talks with Troika Dialog, a Russian investment bank that owns 25 percent of AvtoVAZ, over the purchase of its AvtoVAZ stake.

Renault now owns 25 percent plus one share in AvtoVAZ, which it acquired in early 2008 for $1 billion. As well as Troika Dialog and Renault, the other core shareholder is Russian Technologies, a governmentowned holding company that also owns 25 percent plus one share.

In November 2009, Russian deputy prime minister Igor Shuvalov said that Russia would welcome Renault taking a controlling stake in AvtoVAZ. A Renault spokeswoman said at the time that Renault did not intend to increase or reduce its stake "for now".

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