Economic transformation

Russia's GDP of $1,226 billion places it ninth in the world. The economy has expanded continuously since 2000, with 7% growth forecast for 2007. The world's number-one gas producer and number-two petrol producer, Russia is attracting more and more private capital from abroad, with investments rising 55% in 2007.

Russia's automotive sector

A significant part of this investment is fuelling the automotive sector. All the major carmakers currently have projects to set up plants in the country. Russia has become one of Europe's largest auto markets, with two million cars sold in 2006. For a country with a population of 142.5 million, the vehicle ownership rate remains low, at 170 per 1,000 inhabitants.

Renault in Russia: setting up Avtoframos

Renault has been doing business in Russia since 1907. A real turning point for Renault came in 1998, with the founding of Avtoframos, a company under Russian law held 50% by Renault and 50% by the City of Moscow. Avtoframos was set up to produce and distribute Renault vehicles in Russia. The company invested €230 million in 2003 to manufacture and sell Logan. The Avtoframos plant, dedicated to Logan production, was opened in 2005. In 2006, Renault's holding in Avtoframos increased to 94.1%.

Renault now has a network of 74 dealerships and 91 sales outlets, selling a large part of its vehicle range, from Clio to Espace, along with light commercial vehicles and Logan, sold under the Renault brand. In 2006, Renault sold nearly 72,500 vehicles in Russia for 3.8% market share.

New partner in Russia

Renault signed a Memorandum of Understanding with AvtoVAZ in Togliatti, Russia, on December 8, 2007, becoming a strategic partner of the Russian company. Founded in 1966, AvtoVAZ is a full-line, entry-level carmaker. It is Russia's largest, accounting for 70% of domestic production, with annual output of up to 750,000 vehicles. AvtoVAZ is also a major distributor, selling 635,000 vehicles in 2006. The company has a plant in Togliatti, manufacturing Ladas.

The partnership will enable AvtoVAZ and Renault to:
- Accelerate AvtoVAZ growth by renewing and extending its range
- Develop the Lada brand to maintain its leadership position in Russia
- Share know-how and technologies, particularly on manufacturing and marketing

The agreement would also give Renault access to more available capacity. And Russia could become the Renault group's largest market.