No decision on the proposed joint venture under discussion between General Motors (GM) and AvtoVAZ will be made before September 2000, according to GM. The delay is reportedly to enable GM's strategic partner, Fiat, a clear run in its launch of domestic production of the Palio and Palio Weekend at Nizhny Novgorod. The Palio is similar to the Opel Astra. However, GM stresses that the two parties are still talking and that there is no hint of a breakdown in the negotiations.

AvtoVAZ is keen to close on the deal before the end of the year, given its need for funding to launch its new Niva VAZ-2123. It is hoping to begin production within the next 12-18 months, following a test run of 1,000 VAZ 2123s this year. The investment needed to produce 75,000 Niva and 15,000 Opel Astra T-3000s, specially adapted to Russian conditions, is estimated to be some $300m. The company claims to be exploring other investor options, in the event that the GM talks fall through.

However, this seems to be something of an empty threat. AvtoVAZ is struggling with significant debts and tax arrears and it is unlikely that the company will easily attract alternative means of foreign investment. Russian investors would also appear to be thin on the ground. In this respect, GM clearly has the upper hand.