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Lada to reap benefits

Speculations aplenty about how Russian President Putin's friendly ties with French President Sarkozy were a deciding factor in the negotiations, in which Fiat and GM led the way until very recently. But today Russia's largest carmaker AvtoVAZ has sold a minority share of 25% to France's Renault.

Today Renault's Carlos Ghosn and AvtoVAZ leaders have signed a Memorandum of Understanding in Togliatti, Russia. In the deal Renault will accelerate the development of AvtoVAZ, and help Lada grow to its former glory while sharing technological expertise and know-how. What Renault receives in return is a little more hazy, besides the significant 25% cut in the company, since it seems unlikely that Renault will be able to use AvtoVAZ plants for Renault and Dacia production.

Lada sales wil contribute to the Renault-Nissan Alliance's Russian market share, and with AvtoVAZ' expertise in Russia Renault and Nissan sales may increase along with Lada's. How long the co-operation lasts remains to be seen, GM has been working with AvtoVAZ for a few years now but relations have become jaundiced after some disputes.