• Nov 30th 2009 at 1:59PM
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Renault has found a way to appease Russian Prime Minister Vladimir Putin that didn't involve writing a check for $850 million. The French company took a 25% stake in Russian carmaker Avtovaz, and when Avtovaz started having a hard time of it earlier this year Renault looked content to see how things turned out. Putin wasn't: he told Carlos Ghosn to inject cash into Avtovaz, or Putin would dilute Renault's stake with a share sale.

Things retreated from the cliff when Renault promised technology to Avtovaz, in return for which Russia would put 50 billion rubes ($1.7 billion U.S.) into the company. Renault's technology share is valued at €240 million ($358 million U.S.). The know-how could be of greater assistance to both companies than if Renault had contributed cash: Avotvaz gets something it can build on long term, and Renault doesn't have to throw good rubles after bad.

Avtovaz is nowhere near rescued, however. The company remains loaded with debt, making it difficult to finance its restructuring, and sales of its primary vehicle, Lada, haven't rebounded. And to hear Putin tell it, he could be knocking on Renault's door again soon.

[Source: Bloomberg | Photo: PIERRE VERDY/AFP/Getty Images]

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    • 1 Second Ago
      • 5 Years Ago
      Don't turn your back on Putin.
      Funny how we can live in times and allow someone like that to have power, when they will write books about him and wonder how he was allowed to stay in power.
        • 5 Years Ago
        @ Wise Car Shopper

        hahaha, most likely
      • 5 Years Ago
      "...bring money in through exports- especially from emerging Eastern European market."
      Only in your dreams Temple. No one want's to even touch that sh!t they making there.
      There are som much better alternatives to Lada, Volga, what ever.
      • 5 Years Ago
      I believe they still use the old FIAT 131 platform..............
      Yes that was the time that Russia supplied FIAT that dodgy steel that made FIAT famous for the reliability issue (cars going rusty before their time), while FIAT gave the platform of FIAT 131 to Autovaz in exchange.

      I still don't know who got the worst deal...................
      • 5 Years Ago
      If Russia really want save Avtovaz, They should block import cars from China.
        • 5 Years Ago
        Putin doesn't want to see Avtovaz become just a domestic player. They want its brands to have the technology to compete globally and bring money in through exports- especially from emerging Eastern European market. Blocking foreign competition really doesn't help.

        The ruble crumbling in value doesn't help, it deters FDI (foreign direct investments) into Russia. A lot of automotive companies have scaled back or pulled out of that market.

        There is obviously a lot that happened behind closed doors on this deal.
      • 5 Years Ago
      Being a former commrade, I have only one thing to say to the Russian auto industry. Swallow the pride (with vodka) and get out. Since the 60s, AvtoVAZ has never made a single "good" car. Just like the Chinese, first Ladas were copies of others' design and not good ones at that. No matter what, these cars were bought by the USSR citizens because they had no other choice and for a decade or so, you had to be chosen to buy one.
      Since Ladas have been in production for decades, I can only imagine that it is due to vodka enriched style of management and uneducated folks at Kremlin, that the auto industry in Russia has evolved so little and with such small results. The Kalina and Priora are the pride and joy of AvtoVAZ now, but they are still not up to par. Even though the Chinese being not as good, they are learning much faster and its only a matter of time before they catch up and pass the Russians. The Russian government invested too much (or all) energy into the Cold War and unfortunately for them, cars were not part of it. Things like power windows/doors/mirrors, AC, fuel injection and air bags were only available two decades after everyone else in the world had one. And even then, all of it is being sourced from foreign suppliers. Renault, just like GM, is making a bad investment. It will not pay off, because no matter how much technology you share, having too much potato/wheat juice in your blood flow renders any learning impossible. Other than technology, Renault needs to turn around the management/operations and that is going to be like pushing the moon further away from Earth. As long as the Russian government is involved in the business, no foreign automaker can save AvtoVAZ. Whatever cash will be put it, will be only a waste of money as it will not return profit for a VERY long time, if any.
      Russians are good at making planes, rockets and weapons and should probably stick to it.
        • 5 Years Ago
        wel, ok.

        but the Lada Niva is one of the best offroad vihicles ever made.
        probally very close if not right behind to the original range rover and landrover defender.
        although very thirsty commrade.
      • 5 Years Ago
      Waste of money.
      • 5 Years Ago
      AvtoVAZ sounds like some sort of prescription drug you would see a TV commercial for.

      Sorry, that's all I have to contribute.
      • 5 Years Ago
      That picture is just asking to be captioned.

      Maybe something like..

      In Soviet Russia Putin bow's to you!
      • 5 Years Ago
      That photo seems to be showing Putin "bowing" to Goshn. Wow that must be a first for Putin!
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