General Motors Corp yesterday approved a $333m project to make cars in Russia with AO AvtoVAZ and European Bank for Reconstruction and Development (EBRD), sources told

The investment includes $101m from AvtoVAZ, $99m from GM and $40m from EBRD, insiders said. The bank also would lend $93m.

The venture, still unnamed, would build an upgraded version of AvtoVAZ’s new small sport-utility vehicle (SUV): Lada Niva 2123. The model would don the US automaker’s brand Chevrolet in Russia and elsewhere. Higher-specification versions would run on engines from GM’s subsidiary Adam Opel AG of Germany.

In a breakdown of investment, AvtoVAZ would contribute $65m in the value of the vehicle (including rights to intellectual property and trademark) and $36m in facilities and land, sources said. The US manufacturer would supply $97m in cash and $2m in equipment.

Niva would be made at a new plant, nearly 1,000km southeast of Moscow at AvtoVAZ headquarters in Tolyatti.

Each automaker would own 41.5% of the venture, while EBRD would hold 17%, sources said.

Contact Ryan Tutak, associate editor of for Eastern Europe
F +36-1 / 317-7257
T +36-1 / 266-2693

Read an article analysing the project’s prospects here

Read a feature on takeover threats to AvtoVAZ here