France, Russia Considering Swapping Stakes In State-Owned Automakers
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.
More by Edward Niedermeyer
Comments
Join the conversation
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'...
I'm quite sure Medvedev is President of the Russian federation and Putin its Prime Minister...