MOSCOW (Reuters) - Russia’s biggest automaker Avtovaz said on Monday it would buy out General Motors (GM.N) from their joint venture producing vehicles in Russia under the Chevrolet brand, effectively ending GM’s presence in car assembling in the country.
Russia’s car market was among Europe’s top performers before the imposition of western sanctions in 2014 which, coupled with falling oil prices, sharply weakened the rouble, increased the cost of buying a car and curbed Russians’ ability to buy new vehicles.
As a result, foreign carmakers started to rethink their strategies of doing business in Russia.
On Monday, Avtovaz signed an agreement to buy GM’s 50% stake in the venture, which sees the two companies produce the Chevrolet Niva car from a factory in Togliatti, a city on the Volga river.
Avtovaz did not disclose financial details of the deal which would end GM’s presence in the car assembling business in Russia.
According to the agreement, the factory will continue producing and selling cars under the Chevrolet brand for “a certain period of time” before switching to Russia’s Lada brand.
Built in 2001, the Togliatti factory has the capacity to make up to 100,000 cars a year and produces the Chevrolet Niva, whose design was based on the Soviet-era Niva by Avtovaz engineers and developed further with GM’s input.
Russia’s automobile market has struggled in 2019, with sales of new cars in November falling by 6.4% year-on-year, the Association of European Businesses (AEB) said last Thursday.
Reporting by Gleb Stolyarov; Writing by Alexander Marrow; Editing by Edmund Blair/Katya Golubkova and Louise Heavens