TOGLIATTI, Russia - Russia's biggest carmaker AvtoVAZ said it would invest RUB7 billion (approx. €175 million) over the next three-four years in modernising IzhAvto, the Izhevsk-based vehicle manufacturer, which it plans to fully take over during the first half of 2011.
The investment, also to be used for expanding annual capacity from 220 thousand to 300 thousand units, will partly be financed with loans from Russian state-owned Sberbank, which currently holds a controlling stake of 51% in IzhAvto as a collateral.
AvtoVAZ, Russian Technologies and Sberbank signed a memorandum last week to develop IzhAvto, under which the factory will churn out 126 thousand vehicles as early as next year, and up to 300 thousand by 2014. The company, which is set to produce not only Lada, but also Renault and Nissan branded cars, will triple its workforce to as many as 7,000 over the next four years.
Prior to the memorandum of understanding with AvtoVAZ, Sberbank also carried out talks with Hyundai Motors about assembling cars at the Izhevsk plant, but instead of the South Korean carmaker it has chosen AvtoVAZ because it offered 'the best options for localising production, creating jobs and meeting the requirements of Izhavto's creditors'.
IzhAvto currently produces the Lada 2104 and Izh-27175 models for the home and export markets such as Armenia, Azerbaijan, Belarus, Kazakhstan and Ukraine.
