Interfax reported that OJSC Avtovaz and the Renault-Nissan alliance intend to organize the production of a new family of engines in Russia, with a capacity of around 500,000 units per year.

Mr Igor Komarov Avtovaz President said "Literally this week we agreed with the alliance on producing a new family of the alliance's modern engines, and we received the license for these engines for free. Production of these new-generation engines will be at least 500,000 per year."

He said that in addition, the Renault-Nissan alliance could wrap up a deal on boosting its stake in Avtovaz in March 2012. He added that "In my view, the main issues among shareholders on acquiring a controlling stake have already been resolved, and I think that there are serious grounds to hope that the deal will be signed and negotiations will be completed in March."

Mr Komarov also said that the plant's investment program until 2020 requires 4 billion [euro] of investments, and we will fund and earn the majority of it ourselves."

He said that "However, a shareholder contribution is also being proposed, and we will need to occupy around 1.5 billion euro in banks. Quality doesn't improve through purchasing equipment, but rather through properly organizing control over production processes."

He added that furthermore, GM and Avtovaz are currently initiating a project on upgrading the Lada 4x4.

Mr Komarov said "Now we are beginning a project with GM on upgrading our Lada 4x4. We hope that the car will be seriously upgraded at the end of 2014 and beginning of 2015. Even today the car enjoys major popularity among our buyers."

Asked about IzhAvto future prospects, he said that IzhAvto is a complicated but very promising project.

Mr Komarov said "We immediately decided not to limit ourselves just to assembly, but also to conduct serious modernization of this plant. Even though we plan to have losses at this plant over the next two years, within two years we plan to organize thoroughly modernized and efficient full-cycle production of up to 300,000 cars per year. We also expect to produce the Lada brand there. We will start in the middle of next year, in the third quarter with Granta production and then we will gradually add Renault and Nissan."

Avtovaz does not expect any serious growth next year. He said that "We don't expect serious growth and, undoubtedly, the year will be difficult. For us this will be a year to upgrade our capacity and our model range. We expect success from selling our new Lada Granta. We plan to launch a new line jointly with the Renault-Nissan alliance with a capacity of over 300,000. In March we plan to launch the seven-passenger Largus station wagon and at the end of the year we will launch the Nissan. We will become a multi-brand producer at the end of the year."

(Sourced from Interfax)