Fiat Group and JSC Avtovaz have announced the signing of a Memorandum of Understanding (MoU) as the basis for the establishment of cooperation initiatives aimed at supporting the expansion of Avtovaz, in the area of passenger cars encompassing engineering and technological processes, development, manufacturing, product sourcing, engines and other components. Fiat Group’s involvement in the development of the Fiat brand in Russia based on prior agreements with other parties continues strong and is not affected by this MoU.

Following the MoU, joint teams will be set up by the two Groups to determine the feasibility and specificity of the nature of cooperation, both in the short and long term. The two companies expect to sign definitive agreements in the course of the coming months.

Avtovaz has had a long relationship with Fiat, even since it was set up in the late 1960s with the Turin carmaker's close assistance. The company launched car production under the Lada name using a revised version of the Fiat 124, with basic specification and toughened up for the harsh Russian roads. The factory was based at Togliatti, which was named after a Russia communist. Today the Lada factory is one of the largest in the world and 750,000 vehicles a year are produced, including the quarter of a century old Samara; the Kalina, introduced in 2004 in hatchback, saloon and estate format; and the Niva 4x4, which is mostly unchanged after three decades in production and is Russia's off-roader of choice, and is also the mechanical basis of the Chevrolet Niva, part of a joint venture Avtovaz has with General Motors. Avtovaz is considering building on this joint venture relationship with GM, and is in on-going talks that could see it build either the Opel Corsa or Astra at its factory.
 

It has also contracted Austrian automotive engineering concern Magna International to develop new platforms, and as well as talking to Fiat, it is in discussions with a range of other carmakers including Renault. There is also widespread belief that there will be consolidation between Russia's biggest three carmakers, Avtovaz, KamAZ and GAZ.

Sergio Marchionne, Chief Executive Officer of Fiat Group and Fiat Group Automobiles, said, "A cooperation with Avtovaz represents a significant step forward in our industrial strategy of targeted alliances. It is our view that Avtovaz will re-emerge as a strong automotive player in a market that is showing significant growth potential. And we are delighted to be able to assist and participate in this process."

In his response Mr. Chemezov stressed that “the Memorandum signed is the most important stage in the Russian-European cooperation in the sphere of automobile production. Now we are entering a brand new level of relations with the Fiat Corporation which played the most decisive role in the construction of Vaz in the 60s of the last century. Fiat helped to design the most popular car in Russia which won the hearts and souls of our automobilists. We hope that we shall obtain success once again, revive the authority and glory of Avtovaz,” emphasized Mr. Sergey Chemezov.