Renault-Nissan Hooks Up with Lada

Over the past year, the name "Renault" has

popped up just about every time

a potential partnership or acquisition was mentioned. Renault, and its partner Nissan,

looked to be interested in finding a new way to expand their market share. And why not? The two have

really changed things in growing economies with the re-invention of the Dacia

brand. The Logan is a simple, but durable automobile that despite being very

affordable is built to meet first world standards in terms of emissions and

passive safety. Despite success, this isn't quite enough to satisfy the French-Japanese

partnership. Which company will be the next partner? Will it be Chrysler? Ford? GM, even?

No, the answer comes from Russia.

AutoVaz is Russia's biggest producer of automobiles, and

while you might have heard of it you'll most certainly know of its most popular brand – Lada.

Up until know, AutoVaz has been owned by a company called Russian Technologies,

but they have sold Renault a 25-percent stake in the firm. Officially, the two automakers have what is called a Memorandum of Understanding. The contract

essentially stipulates

that AutoVaz will gain access to some of Renault-Nissan's

technologies and platforms. Renault in turn gets access to one of the fastest

growing marketplaces, and a new brand that it can add to its increasing

portfolio.

As it stands, Renault-Nissan seems to have picked the

right partner and there's a great deal of growth opportunity for Lada. The Lada brand

isn't exactly known for its quality, fit and finish or refinement, but if Lada's

future cars can improve in these areas they should continue to sell well in their home

market despite new competition. AutoVaz is a powerhouse in

its home country, commanding an impressive 70-percent share of Russian

production. As Russia's demand and the demand for cars in neighboring countries continues to

increase, there is potential for a lot of money to be made. Renault-Nissan

wants to

see Lada prosper, with an output of 1,000,000 cars per year.

Currently, the brand makes 700,000 cars per year at its main Togliatti factory.

What will be interesting to see is the course of action

of the two firms. Will we start seeing Nissans and Renaults rebadged with Lada

logos and built locally? This may happen, not necessarily with the latest

products, but perhaps from earlier generation vehicles. As for Renault-Nissan,

they won't be using AutoVaz as a gateway to Russia to sell vehicles, as both

brands already sell within Russia, and in some cases build their cars there.

It will also be

intriguing to see what will happen to the ties that Lada has with Canada's Magna to build a

knock-down vehicle, as well as with GM and the modernized Niva project.