France, Russia Considering Swapping Stakes In State-Owned Automakers

Edward Niedermeyer
by Edward Niedermeyer

You take some of my rescued state-owned automaker, and I’ll take some of yours. That seems to be the cunning plan cooked up by presidents Putin and Sarkozy, as the two face the prospect of rescuing struggling firms in the midst of a weak European market. And actually, it seems that the idea was really Putin’s. French-owned automaker Renault is “more than happy” with its 25 percent stake in the moribund Russian automaker AvtoVAZ, reports Bloomberg, but Russia is offering to buy 15 percent of the French firm if France in turn takes on more AvtoVAZ equity. Considering that Reanult paid $1b for 25 percent of a firm that has been kept alive only by government intervention, a closer embrace of VAZ does not seem advisable. Nor, frankly, does any form of “Franco-Russian Leyland” sound like a good idea.

But Putin knows VAZ needs platforms for future cars to compete with the Western automakers building high-quality cars in Eastern Europe. He tell ITAR-TASS

We very much hope that Renault and we will go further and a new platform for five car models will materialize. You can have no doubts you will have support from the government of Russia.

Russian banks tried hard to snag Opel from that other state-owned automaker, GM, in hopes of accessing competitive vehicle architectures like the Epsilon II and Delta II midsized and compact platforms. Because that deal fell through largely due to concerns over intellectual property protections in Russia, Putin is also moving to allay potential Renault concerns over just handing a platform over in exchange for equity in a problematic firm. He speaks to the concern in People’s Daily, saying

To steal a delicious piece of technology from an owner’s table and consume it under the blanket — we don’t have such a practice in the Russian Federation. Are there any victims due to technology transferring? Just point me out to them. Everything is for sale. Modern technology is a commodity

Which is why Putin’s Lada has an Opel engine. Perhaps a better argument would have been that state-owned automakers are a commodity.


Edward Niedermeyer
Edward Niedermeyer

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  • L'avventura L'avventura on Jun 30, 2010

    As a Russian friend once told me, 'no self-respecting Russian will do business with another Russian"... With that said, Russia hold a huge market potential, however, the risks associated with that market are large. We have large currency fluctuation, political instability, and huge risk of unnecessary government intervention. Politics is business and business is politics. It serves as bad economics. However, one, and possibly the only way to succeed in Russia is by doing business with Putin and his crew. As Gump once said, 'you never know what you're going to get'...

  • Coligny Coligny on Jul 01, 2010

    I'm quite sure Medvedev is President of the Russian federation and Putin its Prime Minister...

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  • Gray Here in Washington state they want to pass a law dictating what tires you can buy or not. They want to push economy tires in a northern state full of rain and snow. Everything in my driveway wears all terrains. I'm not giving that up for an up to 3 percent difference.
  • 1995 SC I remember when Elon could do no wrong. Then we learned his politics and he can now do no right. And we is SpaceX always left out of his list of companies?
  • Steve Biro I’ll try one of these Tesla driverless taxis after Elon takes one to and from work each and every day for five years. Either he’ll prove to me they are safe… or he’ll be dead. Think he’ll be willing to try it?
  • Theflyersfan After the first hard frost or freeze - if the 10 day forecast looks like winter is coming - that's when the winter tires go on. You can call me a convert to the summer performance tire and winter tire car owner. I like the feel of the tires that are meant to be used in that season, and winter tires make all of the difference in snowy conditions. Plus, how many crazy expensive Porsches and Land Rovers do we see crashed out after the first snow because there's a chance that the owner still kept their summer tires on. "But...but...but I have all wheel drive!!!" Yes, so all four tires that now have zero grip can move in unison together.
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