Renault-Nissan Alliance, Russian Technologies Finalise Deal
News: Renault-Nissan Alliance, a joint venture (JV) between French automaker Renault and Japanese automaker Nissan Motor, finalised a deal with Russian Technologies State Corporation on December 12. The Renault-Nissan Alliance will form a JV with Russian Technologies with an investment of US$742mn. The deal states that the alliance will acquire automaker AvtoVAZ's stake from investment bank Troika Dialog to hold 67.13% of the JV, while the remaining 32.87% will be held by Russian Technologies. The JV will then have a 74.5% stake in AvtoVAZ. The deal's implementation is expected to happen no sooner than 2014.
BMI View: In May, the Renault-Nissan Alliance finalised an agreement to acquire a majority stake in AvtoVAZ. At the time, BMI was optimistic about AvtoVAZ's potential to fare well in the high-growth Russian market, and we maintain this bullish view. We expect there to be ongoing investment in AvtoVAZ, mostly in the form of technology transfers, updated production machinery, and the development of cars based on the Logan platform. BMI believes that the Russian market is integral to Renault's growth strategy. BMI forecasts vehicle sales in Russia to rise 6.8% y-o-y in 2012, and we expect this strong growth to continue over our forecast period to 2017.