Renault, AvtoVAZ close in on Russia car plant

MOSCOW, May 22 (Reuters) - French car maker Renault SA RENA.PA, in partnership with Japan's Nissan Motor Co Ltd 7201.T and Russia's AvtoVAZ OAO AVAZ.MM, is close to acquiring Russian car factory IzhAvto, Russian media reported on Thursday.

“Today the decision was made for the Izhevsk automotive factory to become a part of that alliance, to be acquired by that alliance,” IzhAvto head Mikhail Dobyndo told Interfax, referring to Renault-Nissan and AvtoVAZ.

While confirming plans to acquire the plant, the president of AvtoVAZ, Boris Alyoshin, told Reuters the companies have not completed the valuation of IzhAvto and have not agreed on a price.

“We haven’t yet talked price, or completed due diligence, but I can tell you without question that we intend to buy,” said Alyoshin, whose group is 25 percent owned by Renault.

At an investment forum in the Urals region city of Izhevsk, Dobyndo told reporters Izhavto would seek to raise production to 350,000 cars per year after the acquisition, compared with an inital annual output of 220,000 cars.

The factory now produces light inexpensive vehicles using Soviet technology, while also assembling the Spectra and Sorento models for Korea's KIA Motors Corp 000270.KS.

Renault, having purchased its blocking stake in AvtoVAZ this year, is seeking new capacity to meet its goal of producing 1.5 million cars a year by 2014. (Reporting by Anton Doroshev; Writing by Simon Shuster; Editing by David Holmes)