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Joint Venture Of General Motors And Avtovaz

Joint Venture Of General Motors And Avtovaz

German car manufacturers have bought quite a spectacular turnaround to the world’s automobile industry. Cars are not what they used to be two decades ago. With German technology and innovation at work, we have seen several ground breaking projects which have kept German cars in a separate league altogether. A recent example of such creative adventurism is General Motors’ strategic alliance with AVTOVAZ, which is a Russian automobile company.

It’s not the first time we have seen Germans and Russians setting up alliances to shock the world. This time however, the coalition, has spurred very positive vibes; obviously because it is a totally harmless and has no world domination intents. However, keeping history aside, they do intend to take over the market share of the automobile industry, which in many ways can be perceived as a threat to companies worldwide.

The venture between both the companies was named as CJSC GM-AVTOVAZ, and it took effect on 27th of June in 2001. The representatives of General Motors, AVOTVAZ and European Bank of Reconstruction and Development (EBRD), signed a general framework agreement at that moment. Afterwards, the foundation meeting of the joint venture held on 30th of July 2001 and on 2nd of August 2001, it was registered in Russian Ministry of Justice.

The much talked about venture started off with a total contribution by share holders of $238.2 million in which shares of General Motors and AVTOVAZ were 41.61 % each and the remaining 16.78% was contributed by EBRD. The shares of EBRD were later purchased by CJSC GM-AVTOVAZ after the approval of an agreement by the Board of Directors, which left both companies with a 50% ownership each.

According to this venture, CJSC GM-AVTOVAZ is engaged in the production of Chevrolet NIVA based on Lada Niva (Russian word for crop field). The car is sold to the customers in Russian Federation and many countries from the Common Wealth of Independent States (CIS). Cars are offered to customers in different locations through a Network of dealers.

Scrap page program was launched by CJSC GM-AVTOVAZ on October 1st, 2014, according to which an option is provided to customers under the terms of the trade-in program designed for car owners to exchange their vehicle or scrap them while availing a discount on the new Chevrolet NIVA. This offer is extremely fascinating for the customers who want to experience the feel of the new Chevrolet NIVA. The modification of new car was done by GM, while it is being produced in Tolyatti, Russia since 2002. The interiors and the body are new but it carries the transmissions and mechanicals of Lada Niva and engine of original VAZ 2121(an off road vehicle).

Many ups and downs came within the 13 years period, however the venture initiated is still in business and has gained immense success in the world of automobiles. Recently in September, The directors of the company approved a plant expansion, worth $200 million, which is planned to be completed by 2015. This will help in boosting the capacity of NIVA’s production by 20%, which will become 120,000 vehicles in a year and will require doubled workforce up to 2,900 employees.