GM Getting Cozy With the Russians

From Russia this morning comes word that General Motors and Russia's largest car maker, AvtoVAZ, have struck a deal to co-produce the new Lada Niva. As can be imagined, there are already conflicting reports on who will manage production and assembly of the jeep-like vehicle (apologies to Chrysler) when it is launched in 2002, but GM has confirmed that it will invest $99 million for a 41.5% stake in the venture.

AvtoVAZ will also take a 41.5% stake and the European Bank for Reconstruction and Development is reported to be investing about $93 million and would hold a 17% stake. Reports say this is the largest foreign investment ever made into a Russian car company.

The Niva will be an up-market vehicle selling for about twice as much as other AvtoVAZ models. It will carry a Chevrolet bow tie badge and GM's Opel division in Germany will supply the engines.

Perhaps the most interesting thing to come out of this is a comment made by a senior AvtoVAZ executive in the Russian press. He stated that there were numerous other projects being discussed between his company and GM executives. Final go ahead for the project still requires approval by EBRD's board.