The Renault-Nissan alliance has announced a joint venture with Russian Technologies to take a majority stake in Avtovaz, the country's top automobile manufacturer.
The companies have confirmed the signing of a memorandum of understanding this week, giving the group a 74.5 percent share in the Russian producer.
Russian Technologies is already a major shareholder in Avtovaz, and Renault bought a 25 percent share for around $1 billion in 2008.
The French carmaker will invest around $300 million in the venture, while Nissan will invest around $450 million. Together, the Franco-Japanese pair will hold a 67.1 percent stake in the joint venture.
The joint venture will acquire its larger Autovaz stake by purchasing the shares of Russian bank Troika Dialog, with periodic payments to be made through to the end of 2014.
“Today’s memorandum is the latest step in an expanding collaboration that helps modernize the leader of Russia’s auto industry,” Renault-Nissan Alliance Chairman and CEO Carlos Ghosn said.
“Just as Renault and Nissan will continue their technology transfer to AVTOVAZ plants, our AVTOVAZ colleagues will contribute more and more to the Alliance’s multicultural management bench.”
The news follows an announcement last month by Russian prime minister Vladimir Putin, inaugurating a $525 million upgrade at Autovaz that will boost production capacity by 350,000 cars each year.
Avtovaz currently produces around one million cars a year, among them the Lada Kalina and the nearly 20 year-old 110, and the Niva off-roader.
Renault-Nissan sold around 880,000 vehicles in Russia last year, making it the alliance's third largest market after China and the US.
Russia is expected to overtake Germany as Europe's biggest carmarket by 2014.