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WHISPERS: Will the Russians Ditch General Motors?

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WHISPERS: Will the Russians Ditch General Motors?

Date posted: 02-03-2006

TOGLIATTI, Russia — Russian automaker Avtovaz, which is now controlled by Moscow, said it will build a new factory near its existing facility here on the Volga River and is reviewing its joint venture with General Motors.

Known outside Russia for its clunky Fiat-based Ladas, the company has been in the process of updating its model range for more than a decade while struggling with chronic cash-flow problems. Avtovaz had a dream of cracking the U.S. market back in the 1970s but never got any closer than Canada.

The automaker builds more than 700,000 cars a year and is far and away Russia's largest vehicle manufacturer.

Avtovaz executives said the new factory will have an annual capacity of 450,000 vehicles and will take at least three years to complete. They also said the unprofitable GM venture, which builds the Chevrolet Niva compact SUV, may be shuttered.

A news report from Reuters quoted a GM spokesman as saying: "We have [an] interest in making sure we maximize efficiencies in the relationship so that it is beneficial to both parties."

What this means to you: Unlike the Chinese, it looks like the Russians are still a long way from selling cars in the U.S. market.

Link: http://www.edmunds.com/insideline/do/News/articleId=109172

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