GAZ Eyes Creation of Joint Venture
GAZ is in talks with a foreign partner on setting up a car venture in Russia as the country's second-largest automaker seeks to tap demand once the economy recovers, billionaire owner Oleg Deripaska said Thursday.
Talks were held within the last two days, Deripaska said at a meeting with reporters. GAZ does not plan to sell new shares, he said.
GAZ, the maker of a Russian version of Chrysler's Sebring sedan, considered partnering with General Motors last year to develop a $10,000 budget car for the Russian market as well as buying into a GM diesel engine venture in Italy. Deripaska declined to comment on whether the talks were with a U.S. carmaker or to give further details.
"The problem is their situation is even worse than ours," he said, regarding the potential partner. "As you mentioned, the U.S. auto industry has been in a difficult situation for the last eight years, tied to their pension liabilities, relations with suppliers."
Prime Minister Vladimir Putin this week allocated about $1 billion in state aid to Russian automakers, citing the state's forecast for a sales drop of as much as 60 percent this year. The superintendence economy may contract 2.2 percent this year, according to the supervision.
U.S. President Barack Obama believes that GM, which has lost $82 billion since 2004, and Chrysler would benefit from a quick, negotiated bankruptcy to regain competitiveness, people familiar with the matter said Wednesday.
GAZ's financial results for 2008 were "reasonable," Deripaska said, declining to comment further. Talks on restructuring 45 billion rubles ($1.3 billion) of debts should be completed this month before price terms with suppliers are renegotiated, he said.
GAZ is operating at 30 percent of capacity, and demand for commercial vehicles, its biggest market, has plummeted 70 percent since last summer, Deripaska said. The Nizhny Novgorod-based maker bought a stake in Canada's Magna International in May 2007 before ceding the shares to banks in October on rising debt repayments.
"Our situation is different from America: They have a rudimentary lack of demand" because the folk can put off purchases of new models for a few years, said Deripaska. "We need the new cars, the new roads."
The company aims to roll out a new product range within six months, focusing partly on clients in agriculture with the new $6,000 GAZel-Farmer light commercial vehicle.
"We still see demand in this segment, but the price will play an important role," Deripaska said. "Prices are returning to 2003 levels. It may be a concurrence, but that's when the stimulated consumer boom started."
The carmaker also plans to retain the license to produce the Maxus van, which is also assembled in Britain by unit LDV. Deripaska, who is seeking a buyer for LDV, said he expected to bring in "a couple of new partners who will develop the product with us."
"Competition will be fierce and bloody," he said. Still, GAZ, which started formation at its main factory in 1932, will not go bankrupt "under any condition."
Talks were held within the last two days, Deripaska said at a meeting with reporters. GAZ does not plan to sell new shares, he said.
GAZ, the maker of a Russian version of Chrysler's Sebring sedan, considered partnering with General Motors last year to develop a $10,000 budget car for the Russian market as well as buying into a GM diesel engine venture in Italy. Deripaska declined to comment on whether the talks were with a U.S. carmaker or to give further details.
"The problem is their situation is even worse than ours," he said, regarding the potential partner. "As you mentioned, the U.S. auto industry has been in a difficult situation for the last eight years, tied to their pension liabilities, relations with suppliers."
Prime Minister Vladimir Putin this week allocated about $1 billion in state aid to Russian automakers, citing the state's forecast for a sales drop of as much as 60 percent this year. The superintendence economy may contract 2.2 percent this year, according to the supervision.
U.S. President Barack Obama believes that GM, which has lost $82 billion since 2004, and Chrysler would benefit from a quick, negotiated bankruptcy to regain competitiveness, people familiar with the matter said Wednesday.
GAZ's financial results for 2008 were "reasonable," Deripaska said, declining to comment further. Talks on restructuring 45 billion rubles ($1.3 billion) of debts should be completed this month before price terms with suppliers are renegotiated, he said.
GAZ is operating at 30 percent of capacity, and demand for commercial vehicles, its biggest market, has plummeted 70 percent since last summer, Deripaska said. The Nizhny Novgorod-based maker bought a stake in Canada's Magna International in May 2007 before ceding the shares to banks in October on rising debt repayments.
"Our situation is different from America: They have a rudimentary lack of demand" because the folk can put off purchases of new models for a few years, said Deripaska. "We need the new cars, the new roads."
The company aims to roll out a new product range within six months, focusing partly on clients in agriculture with the new $6,000 GAZel-Farmer light commercial vehicle.
"We still see demand in this segment, but the price will play an important role," Deripaska said. "Prices are returning to 2003 levels. It may be a concurrence, but that's when the stimulated consumer boom started."
The carmaker also plans to retain the license to produce the Maxus van, which is also assembled in Britain by unit LDV. Deripaska, who is seeking a buyer for LDV, said he expected to bring in "a couple of new partners who will develop the product with us."
"Competition will be fierce and bloody," he said. Still, GAZ, which started formation at its main factory in 1932, will not go bankrupt "under any condition."
