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6 Oct, 2009 18:35

Car industry shifts into top gear

The total debt of Russia's car industry has reached $3.3 billion, and to map a way out of the problem, the Minister of Economic Development - Elvira Nabiullina - will head a special committee.

International car makers have confirmed they're committed to help modernise Russia's production lines. And they won commitments from government ministers to consult with foreign investors.

In late October Volksvagen will start manufacturing car bodies in Kaluga, 200 kilometres from Moscow, after earlier this year saw Toyota increase staff numbers and production.

First Deputy Prime Minister, Igor Shuvalov, says that in addition to this, french car maker Renault is happy to add investment on top of its 25 percent share in Russia's struggling car-maker Avtovaz.

“Renault representatives say they are ready to provide their expertise, investment and personnel to Avtovaz. They believe they were right to invest in a 25% stake.”

The acquisition of Opel is in its final stage ,and Sberbank, along with Canada’s Magna, is already looking for an industrial partner in Russia.

Sberbank Chairman, Herman Gref, says that partner is expected to get access to the latest technology

“We still have to through all the formalities to finalize the Opel deal. But all key agreements have been reached. As for the industrial partner that will produce Opel cars- Magna representatives have been at the GAZ factory and Izhavto. There are three more car makers we have on the short list.”

At Tuesday's meeting in the White house, car makers and top state officials decided to focus on GAZ and Avtovaz – the country's two biggest car makers. Sourcing more car parts within Russia is seen as one way to lift industry out of recession.