AvtoVaz and Canadian car parts giant Magna are in talks to build a EUR1.5bn car factory in Russia, a Russian government official reportedly said on Wednesday.

“There is a detailed agreement being developed on the development and construction of an automotive plant. Its production capacity would be about 450,000 cars per year,” Boris Alyoshin, head of the federal industry agency, was quoted as saying by news agency Interfax, Agence France Presse (AFP) reported.

Alyoshin reportedly said Magna would construct the platform for European C-segement-size cars at the plant, which a foreign car maker would then complete.

AFP said business daily Vedomosti had earlier reported that the planned Magna-Avtovaz alliance had dashed Renault hopes that Avtovaz would use the platform for its Logan model in a new plant.