Transcript of the beginning of the meeting:

Vladimir Putin: Mr Ghosn, I'm very glad to see you in Moscow. I understand that you have already attended a very pleasant event with the Moscow authorities today on the development of the former AZLK-based production.

Approximately 200,000 cars have been produced here since 2000, and now you are approaching the level of 160 cars per year. We developed car production together in St Petersburg. Nissans are being produced there. I believe they are manufactured under your programme.

We would like to invite you to take part in setting up a similar plant in the Russian Far East. There will be a lot of demand for its products there. The local people are used to Japanese cars, and Nissans will be very popular.

We have ambitious plans to support and expand Avtovaz (Volga Automobile Manufacturer). The automobile manufacturer Renault has a 25% + one share in the company. It is our strategic partner there. During the past year our government has provided 37 billion roubles to Avtovaz to help it repay its debts and create a better economic environment for its future growth.

This year we have already transferred 28 billion roubles to Rostekhnologii (the Russian Technology State Corporation), which is ready forward the sum to Avtovaz.

We have reserved another 10 billion roubles. In Euros this amounted to 900 million and 700 million Euros, respectively, plus the additional 10 billion roubles. Obviously, we are providing these funds for the implementation of the project that we have coordinated with you.

We thank you for your contribution to the plan for the reconstruction and development of Avtovaz and for your proposals on Renault's participation in its future.

For its part, the government will do all it can to create favourable conditions for the development of the city of Togliatti, with an emphasis on the social sphere. Toward this end, the government intends to continue ridding companies of non-production facilities (these are primarily social facilities), thereby helping them to cut costs.

We are pleased with our cooperation with Renault and hope to carry out all of our joint plans. There is no doubt about that.

Carlos Ghosn: (as translated): Mr Prime Minister, thank you very much for your kind words. In the very beginning, when we had just launched our strategic partnership with Avtovaz, your trust in us was of special importance. As the President of Russia, you had chosen our company because you believed in our ability to preserve the Avtovaz brand and become reliable partners in its development. This is why this is so important for us and we are planning to continue our cooperation.

Your government's financial support for the plan to restructure Avtovaz, the efforts of Mr Komarov's team and also the technology that we are sharing with this company make us confident that Avtovaz will become a key player in the Russian market in the short-, medium- and long-term.

We have confidence in the ability of Avtovaz's team of managers. We have found the right approach towards our partnership and the right avenues of cooperation. New technology and new principles of cooperation with our Russian partners will allow Avtovaz to increase its earnings.

Suppliers are the only source of our concern. They have always been a weak link in the car industry. Just a few minutes ago I was discussing this with Mr Sechin (Deputy Prime Minister). He reassured us that the suppliers will receive adequate support. We are ready to work, to keep suppliers busy, and to set up joint ventures for our suppliers with their counterparts in Japan, France and other countries of the world.

Lada, together with Renault and Nissan, has wonderful prospects. Lada is our main brand in Russia. It is the most popular brand and we will continue to improve it with the support of Nissan and Renault. These three brands account for 35% of the global auto market. In Russia, Lada accounts for one third of the market. We hope that by promoting Lada with the support of Nissan and Renault, we will be able to increase this share.

Now we have a great symbol for our partnership in Mr Petrov. He is the first Russian Formula-1 driver on the Renault team.

Vladimir Putin: We will discuss the strategy for the Russian automobile industry this week, in particular the principles guiding transnational partnerships. I assure you that our attitude toward these partnerships will be as open and liberal as possible.

We certainly expect one of the principles to be increased localisation. As far as I know, localisation at Autoframos has reached 40%, and you intend to increase it to 60%.

Carlos Ghosn: 70%.

Vladimir Putin: 70%? Even better. This is our developmental strategy for the automobile industry. We've been discussing this since we first met several years ago. Of course, I can't help but agree with you that we should be helping companies that are involved in the entire automobile industry if we want the programme to be implemented this way. You and I know that after a country-Russia, in this case-reaches a certain level of car production, it becomes cost-effective to begin manufacturing parts domestically and establish new innovative companies with the participation of foreign investors. We have plans for this as well.

And there is also the symbolical step you have taken in Formula-1. Mr Petrov is here, and I wish him success. I am sure he will set a fine example of what cooperation between Renault and Russian car manufacturers can achieve.

As far as I know, the Lada logo will be on the race car and the uniforms of the driver and pit crew. This is appropriate, seeing as we intend to launch a new series of cars together with Renault's direct participation under the traditional Lada brand.

What are your plans, Mr Petrov?

Vladimir Petrov: I will do what I can. I can't make any promises, but I will do my best.

Vladimir Putin: What made you chose this driver over all the rest?

Carlos Ghosn: First of all, he has talent. He is a great driver. We would never sign a driver we had doubts about. He is a rising star.

We made our choice from a pool of several candidates. Mr Petrov's nationality played a role because of our close partnership with Russia. We hope Mr Petrov will win a lot of races for us.

Again, his nationality was one of the factors we considered.

Vladimir Putin: We will take the first steps in sponsoring the project, and it's possible that we will increase our sponsorship role in the future.