Nov 3, 2009, 12:56 GMT
Moscow/Paris - French carmaker Renault will not invest more money in troubled Russian market leader AvtoVAZ, despite a threat by Russian prime minister Vladimir Putin to dilute Renault's 25-per-cent stake in the company should it refuse to do so.
Russian media reports Tuesday cited Christian Esteve, a member of Renault's management committee, as well as the board of directors of AvtoVAZ, saying that Renault would supply technology to help modernize the Russian auto giant, but not more money.
According to the reports, Esteve made clear that Renault wants to keep its share in AvotVAZ, the manufacturer of the Lada car brand, only under the condition that it not invest more money in the company.
Renault plans to meet with representatives of the Russian government on November 10 about the modernization of the leading Russian car brand, he said.
Renault itself has been hit hard by the economic crisis, and is in no position to help its Russian counterpart, said a key Renault executive.
'They wanted us to invest a lot of money, which AvtoVAZ needs, but we don't have large sums,' Patrick Pelata, Renault's chief operating officer, told the Russian newspaper Vremya Novostei.
The Russian carmaker plans to cut 5,000 jobs by the end of the year, however workers fear that 27,000 additional jobs, of a total of 100,000, may be cut if AvtoVAZ does not receive a jolt of liquidity soon.
The company would need an investment of 86 billion roubles (2.9 billion dollars) in order to avoid the layoffs, according to media reports. Renault acquired its 25-per-cent stake in 2008 for 1 billion dollars.
AvtoVAZ said recently that Renault planned to invest 240 million euros by 2012.
Russia, too, has seen its auto sales plummet from 2.9 million units sold before the crisis began to 1.4 million today. AvtoVAZ itself had conceded that it produced no competitive models.
The Russian government is considering a liquidity injection and ways to help the company out of the crisis. Following the planned modernization, production at AvtoVAZ should be doubled by 2014 to 860,000 vehicles per year.
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