Dec. 12 - French-Japanese auto partnership Renault-Nissan finalized a long-awaited deal to expand in the growing Russian market, investing $742 million to control Lada-maker AvtoVAZ. Joanne Nicholson reports.
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It could be the engine for economic growth in Europe.
That's why car manufacturers are looking to Russia.
French-Japanese collaborators, Renault-Nissan, have signed on the dotted line to control AvtoVaz - the firm that makes Russia's iconic Lada.
Chairman and CEO of Renault-Nissan
(SOUNDBITE) (English) CHAIRMAN AND CEO OF ALLIANCE RENAULT-NISSAN CARLOS GHOSN, SAYING:
"Russia as you know is poised to become the largest auto market in Europe by 2015. The market is highly competitive, all of the major foreign auto makers already have operations here."
Volkswagen is one of those operations and Russia's Prime Minister visited this week.
VW has invested 770 million euros in a factory in Kaluga - it handles the whole process including welding and painting.
Russia's need to modernise and its growing middle class is driving the market potential.
Old cars are still on the road in Russia and but more and more people are finding they now have the money to replace them.
And there's another incentive for international players too - no import or export duties.
On the Russian side - it's the technology offered by global players which has attracted AvtoVaz.
It survived a slump in 2009 - but only with a state bailout.
Igor Komarov is the company's President.
(SOUNDBITE) (Russian) PRESIDENT OF AVTOVAZ IGOR KOMAROV, SAYING:
"We will be producing an additional 400 thousand cars for our alliance partners. And around half a million engines and transmission boxes on top of our exisiting orders. But the most important thing is the number of new projects we will be able to develop."
Car sales in Russia grew by 40 percent last year to over 2.6 million vehicles.
Many experts think it could overtake Germany as Europe's top carmaker by the end of the decade.
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