UPDATE: Russia's AvtoVAZ, Renault, Nissan To Pool Purchasing
September 18 2009 - 6:36AM
Dow Jones News
Struggling Russian automotive group AvtoVAZ (AVAZ.RS) plans to
collaborate on purchasing with core shareholder Renault SA (RNO.FR)
and Japan's Nissan Motor Co. (7201.FR) in a bid to reduce costs, a
Renault spokesman said Friday.
An agreement could be reached as early as next week, said the
spokesman, who declined to provide further details.
Renault and Nissan have pooled their purchasing for years as
part of the Renault-Nissan alliance that is cemented with
cross-shareholdings. Renault owns 44.3% of Nissan while Nissan has
a 15% interest in Renault.
A joint venture between Renault and Nissan, Renault Nissan
Purchasing Organisation (RNPO), is responsible for all purchases by
the two automakers. RNPO made purchases totalling EUR60 billion in
2008, achieving significant savings for the two partners.
Both brands maintain their own purchasing departments to cover
the needs specific to each partner.
Renault in the first quarter of 2008 paid $1 billion for a 25%
shareholding in AvtoVAZ, Russia's leading vehicle manufacturer and
owner of the Lada brand.
The stated goal of that long-term alliance is to accelerate the
transformation of AvtoVAZ into a global automotive player, with a
production capacity of more than one million vehicles a year. The
plan is to leverage Renault's technology to improve, renew and
expand the Lada range of vehicles.
Due to collapsing sales in the Russian market, however, AvtoVAZ
contributed a loss of EUR182 million to Renault's first-half
earnings. The value of Renault's share in the net assets of AvtoVAZ
dropped to EUR295 million at the end of March from EUR550 million
six months earlier.
Renault makes its low-budget Logan cars at a plant outside
Moscow and is doubling the capacity of the plant to 160,000
vehicles a year.
At 0930 GMT, Renault's shares traded down 1.6% at EUR33.16 in a
broadly lower Paris market.
-By David Pearson, Dow Jones Newswires; +331 4017 1740,
david.pearson@dowjones.com