The giant Avtovaz plant in Togliatti

The giant Avtovaz plant in Togliatti

Russian prime minister Vladimir Putin inaugurated a new car manufacturing line, marking the latest milestone in the expanding Renault-Nissan alliance and Avtovaz partnership.

The job one ceremony at the plant in Togliatti, the largest assembly plant in the world, wlecomed a Lada Largus multi-purpose van off the line.

EUR400m was invested into this 250,000 sq m industrial complex which will take full advantage of the alliance’s expertise in engineering and cost savings.

The complex hosts the new production line just opened. The line has a maximum capacity of 350,000 cars per year and will produce vehicles for the three brands – Renault, Nissan and Avtovaz. Production starts with two new Lada models, followed by a Nissan vehicle later in 2012, and two Renaults in 2013. Five separate models will be produced across the three companies, reducing costs while preserving the unique characteristics of each brand.

“Our collaboration is deepening every day and increasing economies of scale across the alliance,” said CEO and chairman Carlos Ghosn. “It’s a win-win for all parties – and the benefits keep accelerating as Russia becomes Europe’s economic engine of growth.”

The partnership started in 2008 when Renault bought a 25% stake in Avtovaz and began the transfer of technology and know-how to Russian manufacturing facilities.

“We initiated our project of a common production line in Togliatti two years ago, in the most difficult times for the economy – so it’s a great honour to see it come to fruition today,” said Avtovaz president Igor Komarov. “Our partnership continues to grow deeper by the day.”

This new production tool installed in Togliatti contributes to the three partners’ common goal: achieve capacity of at least 1.6m vehicles per year in Russia by 2016.

In parallel to the expansion in Togliatti, the companies are in the final stages of negotiations to increase the alliance’s stake in Avtovaz.

The alliance sold 878,990 cars in Russia last year – including 578,387 Ladas. With a market share of nearly 33%, Russia is the alliance’s third-largest market after China and the United States.

Russia is the fastest growing economy in Europe and should remain in the forefront for several decades, thanks to the surge in upper- and middle-class consumers in the region.

More than 10m Russian households earn over US$50,000 per year. The consulting firm Ernst & Young forecasts that Russia will overtake Germany as Europe’s biggest auto market in 2015 with approximately 3.4m new cars sold.