2 november 2010

Prime Minister Vladimir Putin met with CEO of Renault-Nissan alliance Carlos Ghosn

Vladimir Putin said that Russia welcomed the opportunity for an increase of Renault-Nissan stake in AvtoVAZ capital. In response, Carlos Ghosn said he thought that the crisis in the Russian auto industry had become a thing of the past and that Russia managed to achieve this because of government support both for the auto industry and AvtoVAZ in particular.

Transcript of the beginning of the meting:

Vladimir Putin: Mr Ghosn, colleagues. I'd like to welcome you to Russia. Our cooperation has been developing significantly. Renault-Nissan is a well-respected brand: both Renault and Nissan. The concern itself is very well known worldwide and here in Russia. I have reviewed the latest data: your Moscow enterprise Avtoframos has already reached the level of producing 160,000 cars a year. It's a decent figure.

AvtoVAZ, in which you own 25%, is being successfully developed and rehabilitated. And I am pleased to note that Renault-Nissan has already invested more than two billion dollars into the Russian auto industry. AvtoVAZ is also making more and more progress thanks to our joint efforts. As you know, the Russian government has invested a decent amount of money into AvtoVAZ: 75 billion roubles. In addition, we have continued the programme for exchanging used cars, and AvtoVAZ is also receiving a substantial amount of money under this programme.

We have allocated several billion roubles to decrease the burden the company bears in dealing with social issues: four billion roubles. And all of this has yielded results. The company's capitalisation, which was 670 million dollars last year, this year has made 1.7 billion roubles to date. And, according to independent experts, this number is even higher. This year, the enterprise will probably increase its output to 600,000. This is quite a significant level.

Wages have been raised by 10%, beginning on October 1. The most important thing is that the enterprise has worked this out with your support and direct involvement in the programme for development and restructuring until 2020. We have discussed it already, we welcome it, including the potential increase – if we agree on the terms – of your stake in the company's capital.

Carlos Ghosn (as translated): Mr Prime Minister, thank you for your words of welcome.

I think that we can be absolutely sure today that the crisis in the Russian auto industry has become a thing of the past and Russia has managed to achieve this, we can say this for certain, because of your unflagging support both for the auto industry and AvtoVAZ in particular.

We recognise and appreciate the fiscal measures that your government is taking in order to encourage both market development and demand for cars in Russia.

People even told me that after you drove a Kalina car the demand for this car swelled to the extent that people now have to wait in line to buy it. And Mr Komarov (Igor Komarov, president of AvtoVAZ) is telling me that he cannot deal with the high demand for this car.

We are fully committed to our obligations with AvtoVAZ. As you know, Lada, Renault and Nissan account for 40% of the Russian market, with Lada, the Lada brand, having a 30% share. Our position is to preserve the levels that have been attained. However, Lada naturally remains the core brand of our partnership. This, of course, will require new products and new techniques, but we intend to bring these techniques and products to Russia.

To give you an idea of the partnership developing between us: the Kalina platform will be used to produce not only Lada, and specifically Kalina, vehicles, but also Renault and Nissan cars, and vice versa, Renault-Nissan's platforms will be used for the production of Lada cars.

According to our calculations, to maintain our 40% share, our sales on the Russian market should exceed four million cars in five years. This means that our alliance will need to have sales of 1.6 million cars. Naturally, Lada will have the major share. Currently, we do not have such capacity in Russia. We plan to build up our capacity, increase our capacity everywhere. And Togliatti will be the main place where we are planning to increase capacity. And also at St Petersburg's Nissan; and then we will reach full capacity at Avtoframos. However, even with all this in mind, if we implement it, this will not be enough. This is why we are developing new projects, additional projects, in order to preserve this share, the market share of 40%. But what is very important, and I want to emphasise this, is that the interaction between the Russian group, the Nissan group and the Renault group is close enough.

Vladimir Putin: How is the Nissan plant in St Petersburg doing?

Carlos Ghosn: Very well. We intend to increase our production capacity in St Petersburg too. The quality of work is very high there, the workers are highly productive after training in St Petersburg. But that plant is relatively small compared with the one in Togliatti. Nevertheless, it is making a very good contribution to the overall progress. And they are producing larger Nissan cars. So, these are our general plans for the future.