GAZ Group, one of Russia’s largest car manufacturers owned by Magna group stakeholder Russian Machines, and General Motors have agreed on GAZ buying a 50% stake in diesel engine specialist VM Motori based in Cento, Italy.
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GAZ is buying its stake from Penske Corporation in a deal signed on 27 August but this agreement is subject to clearance by the European Commission.
GM purchased its 50% share of VM Motori from Penske in 2007 after 10 years of collaboration with the company in supplying engines for its Opel brand products, in a technology agreement with GM Daewoo, and in joint development of a new 2.9-litre V6 turbodiesel scheduled to launch in the Cadillac CTS in Europe in 2009, and in the most recent technology agreements for the manufacturing of VM Motori diesel engines in Thailand and Mercosur.
The agreements enable GAZ Group to set up production of VM Motori engines under license in Russia for its Gazelle and Maxus ranges of light commercial vehicles. In addition, local production will provide an opportunity to satisfy growing demand for light diesel engines from Russian manufacturers of road construction and agricultural equipment.
GAZ is also expected eventually to offer a VM engine in its new Siber line, the Chrysler-designed previous-generation model for which it recently acquired manufacturing rights. Volume production started in July.
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By GlobalData“This equity ownership agreement enables GAZ Group to access world-class diesel engine design and manufacturing,” said GAZ Group CEO Sergey Zanozin.
“Through localisation of diesel engine production we will achieve the strategic goal of creating a full range of diesel engines to meet existing and future customer and environmental requirements for both Russian and global markets,” added Zanozin.
“It’s a highly promising investment opportunity, given the significant increase in demand for diesel engines in Russia and the positive business development of VM Motori globally.”
“Diesel engines have a very important role in GM’s global advanced propulsion strategy,” said GM Powertrain Europe chief Mike Arcamone. “We are leveraging expertise and resources within our company and through technology partners like VM Motori to ensure we develop the world’s best powertrains. Our joint venture agreement with GAZ Group provides business opportunities to expand our diesel engine business with new customers.”
“We look with keen interest at the new joint venture between GM and GAZ,” said VM Motori CEO Vilmo Ferioli.
“We believe GAZ Group will be a strong partner for GM in the VM Motori operation and the entry of GAZ Group as a shareholder brings with it the potential to develop our engine business particularly in new markets, ensuring future growth for VM Motori.”
VM Motori was founded in 1947 and specialises in the design, development and manufacture of diesel engines for agricultural, industrial and marine applications. From the end of the 1970s, it entered the automotive diesel market and its engines powered the first diesel Range Rover models.
In 2007, VM Motori manufactured some 96,000 engines, 80% for export to automotive customers, giving a sales turnover of EUR400m.
