General Motors plans $1billion Russian joint venture with Gaz

Gaz, the Russian automotive group, plans a $1 billion (£502 million) joint venture with General Motors to build a new factory. Gaz, which was founded in 1929 as a joint venture between Ford and the Soviet Union, said it could also involve Daimler in the project.

Its plans for a new factory come as Russia’s vehicles markets are booming. This year its car market is expected to overtake Germany’s to become the biggest in Europe. Russia has already overtaken Germany for sales in the first half of the year after growing more than 40 per cent compared with the first six months of last year. Russia is also Europe’s biggest truck market.

PricewaterhouseCoopers has forecast that the country could double its domestic car production over the next eight years to 3.2 million units. Car sales are soaring on the back of the growing economy and rising incomes. By contrast, sales in many parts of Western Europe are falling because of the impact of the global credit squeeze and the high cost of fuel.

GM, which went into the Russian market in 1992, already has joint ventures with Avtovaz, Gaz’s rival, and with Avtotor and is building a new factory near St Petersburg. Ford, Renault and Toyota all manufacture in Russia with other brands such as Peugeot and Fiat planning to do so.

Leonid Dolgov, head of Gaz’s car operation, said the factory would produce about 300,000 cars a year. Gaz intends to compete directly with Renault, which produces the Logan in Russia. Gaz wants to price new small saloons in the $12,000 to $20,000 range to compete with the Logan and wants to complete a deal by the year end.

Yesterday Daimler, the world’s biggest commercial vehicle manufacturer, said that it wanted to buy a 42 per cent stake in Kamaz, Russia’s biggest truckmaker. Daimler also wants to build a new factory making its own trucks in Russia.

The German company said: “Along with the option of building a new factory for local assembly of Daimler trucks, the division is also studying the possibility of acquiring a stake in Kamaz that would enable the two companies to combine their development, production, and sales expertise.”

It is thought that Daimler could make a binding offer by October for Kamaz, whose market capitalisation is nearly $4 billion. Daimler said it would decide by the end of the year.

— Honda cut its sales forecasts despite first-quarter profits rising 8 per cent to 179.61 billion yen (£836 million) on strong Chinese sales. The Japanese car-maker cut its sales forecast in North America for this business year by 1.4 per cent to 1.74 million cars and world sales target by the same to 4.08 million cars.

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2 Responses

  1. How will GM maintain good customer service during these changes? Have they lost touch with who buys the cars? Or are they just running in search of a dollar?

  2. i am into car sales business and it is a good way of earning money .-:

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