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Russia's car market was among Europe's top performers before the
imposition of western sanctions in 2014 which, coupled with
falling oil prices, sharply weakened the rouble, increased the
cost of buying a car and curbed Russians' ability to buy new
vehicles.
As a result, foreign carmakers started to rethink their
strategies of doing business in Russia.
On Monday, Avtovaz signed an agreement to buy GM's 50% stake in
the venture, which sees the two companies produce the Chevrolet
Niva car from a factory in Togliatti, a city on the Volga river.
Avtovaz did not disclose financial details of the deal which
would end GM's presence in the car assembling business in
Russia.
According to the agreement, the factory will continue producing
and selling cars under the Chevrolet brand for "a certain period
of time" before switching to Russia's Lada brand.
Built in 2001, the Togliatti factory has the capacity to make up
to 100,000 cars a year and produces the Chevrolet Niva, whose
design was based on the Soviet-era Niva by Avtovaz engineers and
developed further with GM's input.
Russia's automobile market has struggled in 2019, with sales of
new cars in November falling by 6.4% year-on-year, the
Association of European Businesses (AEB) said last Thursday.
(Reporting by Gleb Stolyarov; Writing by Alexander Marrow;
Editing by Edmund Blair/Katya Golubkova and Louise Heavens)
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