GAZ Buys Daimler Engines

Moscow January 24, 2005; Reuters reported that Russia's second-biggest automaker, GAZ, which suspended work after a local engine producer hiked prices, plans to buy 1,000 engines per month from DaimlerChrysler, a GAZ official said Friday.

Spokesman Oleg Gamov said the two sides had agreed to increase deliveries to 150,000 annually in two to three years.

Negotiations have already been completed but there is still no date for signing a contract, he said, adding GAZ was interested in signing on as quickly as possible.

"You can draw your own conclusions on the dates of contract signing," Gamov said by telephone from Nizhny Novgorod in central Russia, where GAZ is located. "Naturally, it will be in the nearest future."

The local engine producer, ZMZ, hiked prices by 24 percent to about $1,700 from the start of the year, forcing GAZ to suspend production until the end of January.

Gamov said DaimlerChrysler had offered engines for Volga cars at prices comparable with ZMZ's.

"There is worthy stuff in DaimlerChrysler's rich product line for $1,700. There is then no point making Volgas with ZMZ engines," he said.

But GAZ does not intend to abandon ZMZ altogether as it still hoped for a price cut. "We would not like to behave like this toward our old partner, because a mass car is primarily a cheap engine," Gamov said.

GAZ produced 65,686 Volgas last year.