Progress at the Renault-Nissan Alliance’s Russian venture with AvtoVAZ is proving to be slow.
They are still more than six months away from their first joint manufactured vehicle almost three years after forming their pact.
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The carmakers are building a EUR400m (US$577m) joint assembly ‘platform’ at AvtoVAZ’s 900,000 cars a year Togliatti plant that will produce Renault, Nissan and Lada models but the first Lada will not be ready until at least February 2012.
Executives have said that Renault models are unlikely to be produced until 2013, which means the French company will be restricted to the 160,000 vehicles a year it currently produces at its AvtoFramos plant in Moscow, slowing plans to dominate the Russian market.
Renault is in a fight with Western rivals including General Motors, Ford and Volkswagen to grab a share of the Russian market, which is expected to double sales to around 4m units by mid-decade.
All have signed up to the Russian government’s ‘Decree 166’, a plan to encourage carmakers to increase local production in return for a waiving of customs tariffs on imported parts.
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By GlobalDataThis does not help AvtoVAZ, which says it negates the benefits of a substantial local supply chain built during its 45 year history.
AvtoVAZ CEO Igor Komarov said: “We have a lot of problems with (Decree) 166. It is to create capacity that didn’t exist. The competition will come and fight for every car and will not pay a penny of custom duty.”
Renault bought a 25& stake in state-owned AvtoVAZ in 2008. The Alliance has a target of 40% market share, or 1.6m a year.
Ongoing talks between Renault and AvtoVAZ shareholders about taking a controlling stake show no sign of ending while the challenges of integrating the two firms have slowed development.
Analysts have described progress as “painfully slow”.
Part of the problem has been the assimilation of cultures and languages. Around 160 translators are employed by the company, according to local reports.
Patrick Hemmer, project leader for the new body shop on the joint platform, told Reuters the site was being put together by 50% Renault and 50% AvtoVAZ workers, although Renault employees were focused on the higher skilled work.
AvtoVAZ staff are being sent in groups to France for training to match the standards of their counterparts.
Renault’s Russia chief Bruno Ancelin said that the partnership with AvtoVAZ would be seen as a smart business move in the long term.
