GM Signs Investment Study Agreement with Ukrainian Carmaker

09/16/96

Reuters reported that General Motors and Ukrainian carmaker AvtoZAZ agreed to conduct a $500,000 study to evaluate whether they could form a joint venture, last Thursday. AvtoZAZ, a state-owned company located in the eastern industrial city of Zaporizhia, has been seeking foreign investment since the start of the year. The venture would build cars and light trucks. AvtoZAZ, one of 208 state enterprises that Ukraine's State Property Fund has put up for strategic foreign or domestic investment, currently builds the Tavria, a mid-range car.

At a signing ceremony Louis Sande, GM's overseas vice president, said, "We have to see if we can agree on products that can be manufactured in Ukraine, and evaluate with regard to the facilities that AvtoZAZ has today and how they can be jointly utilized."

Sande said the U.S. government will partially fund the study, which will be completed by the end of the year. He declined to say how much GM might be prepared to invest.

Deputy director Mykola Lastowecky said how much of AvtoZAZ foreign investors might buy "is still under discussion and depends on investors' interests." Earlier in the year Ukraine's government had said a majority stake in the company was available to investors, but more recent media reports put the available shares at 30 percent.

South Korea's Daewoo Group has also expressed interest in the Ukrainian carmaker, and AvtoZAZ is courting both GM and Daewoo: "AvtoZAZ is not just working with General Motors. AvtoZAZ is looking for foreign investors," Lastowecky said.

Paul Dever -- The Auto Channel