AvtoVAZ Chairman Vladimir Kadannikov wants General Motors to acquire an equity stake in Russia's largest automaker.
The two companies are already working together. Production of AvtoVAZ's all-new Chevy Niva sport-utility in partnership with GM is scheduled to start September 23 at AvtoVAZ's sprawling Togliatti plant, about 1,000km southeast of Moscow.
"We would like to have [the GM stake] because we are not only going to do this joint venture," Kadannikov said at the Automotive News Europe Congress June 24-25 in Gothenburg, Sweden. "Our partnership is a strategic one. I met with [GM President] Rick Wagoner at the Geneva auto show in March and we agreed that within a short time we would consider this. "But there have been no firm discussions [about equity] yet."
Kadannikov said AvtoVAZ plans to build just 500 Nivas this year, but that output would increase sharply to 30,000 units in 2003.
AvtoVAZ has an eventual annual production target of 75,000 Nivas.
Kadannikov said the Niva would be exported to western, eastern and central Europe and would be sold through either GM or AvtoVAZ dealers, depending on the territory.
Asked if the Niva would carry a Daewoo badge in some countries, Kadannikov said, "I don't know."
But AvtoVAZ has postponed plans to build a Russian version of the Opel Astra because it can't do it cheaply enough.
"We are trying to get the price of the car below $10,000 (E10,020) and we haven't managed to achieve that yet," said Kadannikov.
To produce the Astra at the required price, "we must look at bringing costs down by using more local components - unless, of course, the buying power of Russian consumers increases," he said.
Kadannikov did not appear too concerned about the possibility of Romanian carmaker Dacia exporting to Russia the so-called E5,000 car it is developing with Renault.
He admitted it would be difficult for AvtoVAZ to produce a competitive new model at that price, but said: "There are no miracles in this world but I would like [Dacia] to be successful."
Renault Chairman Louis Schweitzer has said that the E5,000 price is a "stretch goal" - a deliberately challenging target meant to goad Renault engineers into coming closer to achieving it than they would otherwise.
With the euro strengthening against other currencies, a senior Renault executive said last week that a E6,000 price for the car would be "more likely."
Kadannikov encouraged more carmakers and suppliers to set up operations in Russia and predicted that developing countries' share of the global new-car market would grow from 23 percent to 35 percent in the next decade.
Together with Russia, Kadannikov named China, Brazil, South Korea, Mexico, India, Poland and Thailand as the most promising developing markets.
"Russia still has outstanding strategic partnership potential," said Kadannikov. "Our joint venture with GM to produce the Chevy Niva will be the catalyst for increasing quality of other AvtoVAZ models and a benchmark for improving the quality of all Russian vehicles."
Kadannikov said AvtoVAZ's production output of Zhigulis, Samaras, Ladas and other models was 753,000 units in 2001 and predicted that would rise to nearly 1 million units by 2008.
He said he expected AvtoVAZ's domestic market share to increase from 55 percent to 60 percent during that period.
"Our plans for AvtoVAZ are ambitious," said Kadannikov. "We will maintain and strengthen our position in Russia and become an integral part of the world auto industry."
AvtoVAZ already has a strong engineering base, modern research and development capabilities, extensive experience in developing component suppliers and a large, established dealer network, Kadannikov said.
He encouraged western auto-makers and suppliers to make a decision on investing in Russia within the next six to 12 months. By doing so, they would gain a competitive advantage on later arrivals, he said.
Kadannikov said: "We would be happy to cooperate with you for the benefit of the Russian consumer."
- Jesse Snyder and Sylviane de Saint-Seine contributed