Renault and Moscow agree on Avtovaz

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Russian prime minister Vladimir Putin and Renault are due to sign a memorandum of understanding on restructuring Avtovaz on Friday, but the French carmaker on Thursday again dismissed speculation that it would contribute cash to a bail-out of its troubled Russian affiliate.

The signing will take place in Paris during a visit to France by Mr Putin. In October he threatened to dilute Renault’s stake of 25 per cent plus one share if it did not take part in a rescue of Avtovaz.

Russia’s largest carmaker has warned that it is near bankruptcy and that without further government aid it would be forced to sack 27,500 workers in Tolyatti, the Volga city where it has its headquarters.

Moscow this year pumped Rbs25bn ($855m) into Avtovaz in the form of an interest-free loan. However, the carmaker has since spent the cash as Russia’s car sales fell by more than half.

Renault on Thursday again said that it had no plans to increase its stake in Avtovaz beyond the current level, nor would it contribute cash to a bail-out.

But the French group said it could contribute know-how and technology to a rescue plan.

Last month Renault said it could produce cars under its own brand and that of its Japanese partner Nissan at Avtovaz’s plant.

This already produces cars based on the French carmaker’s low-cost Logan model under its own Lada brand.

“We have been studying the possibility of producing Renault and Nissan cars at Tolyatti, which would provide them with added production volume, and for us, added cars to be sold in Russia,” Renault said.

Renault and Nissan chief executive Carlos Ghosn has made conserving cash a priority during the industry’s current deep downturn, which saw Renault itself forced to take a €3bn ($4.5bn) French government bail-out loan agreed in February.

One industry source, who requested anonymity, said on Thursday that one scenario under discussion might see Renault maintain its 25 per cent Avtovaz stake by valuing its contribution in kind at about €240m.

Renault booked a €182m loss from its Avtovaz stake in the first half of this year.

● PSA Peugeot Citroen said on Thursday it would launch four electric vehicles in Europe in late 2010.

It plans to launch two electric light-duty commercial vehicles, two passenger cars, and a scooter. Peugeot made the announcement in London, where it demonstrated for the first time prototypes of its battery-powered Peugeot Ion and Citroen C-Zero models. The roll-out would put Peugeot just ahead of rival Renault, which plans to begin selling three electric cars and a commercial vehicle in 2011 and 2012.

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