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Russian car giant teams up with Renault

State-run arms export group Rosoboronexport, which currently owns 75% of the Russian car giant Avtovaz is to sell a 25% stake in the car-maker to French auto-manufacturer Renault, with a view to forming a strategic partnership.

Embattled Russian car-maker, Avtovaz, has chosen the French company,  Renault, as its strategic partner after considering a range of offers.

The announcement comes after many foreign car-makers including GM, Fiat and Magna had expressed an interest in taking a stake in the company. Avtovaz will now reportedly offer Renault a blocking stake of 25% of its shares.

Mickael Pak, motoring analyst for IFD Kapital, said the announcement is a surprise and that the new strategic partnership has a lot of work ahead of it.

“Renault has very aggressive plans, but Renault’s Logane is the main competitor to Avtovaz' Ladas, and I don't see at this point how they will deal with the problem,” Pak said.

Avtovaz has been plagued by long-term problems, including a falling market share and management difficulties. This has seen Russian state arms exporter Rosoboronexport come in to try and turn the company around by taking control of the company.