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Renault Takes A Piece Of The Lada Pie

French automaker Renault has completed a deal whereby the company has purchased a 25% share in the Russian automaker, Lada. The $1 billion agreement has suddenly thrusted the Renault-Nissan-Lada group into the number three position globally behind General Motors and Toyota. The remaining shares of the company will continue to be held by AvtoVAZ, Lada’s parent company.

Poorly Made Cars From Ancient Fiat Technology

Lada has been infamously known as the builder of cheap, poor quality cars including the Riva (which has managed to sell well in Europe), Laika, Niva, and Samara, among others. Many Lada models were based on old Fiat technology which was, at best, basic transportation during its time.

The Third Leg Of A Business Relationship?

Renault-Nissan had long been expected to add a third-leg to their business platform with Chrysler being my personal theory as to who would fulfill this position. Russia, however, is the fastest growing automotive market on the planet, even outpacing China and India, two markets that have been attractive to foreign car builders for many years.

What The BBC Said

According to a BBC report, the Renault-Nissan-Lada group will pursue improving the Lada brand with new models rather than bringing in existing Nissan or Renault cars. At one time Lada comprised 70% of the Russian car market, but the native brands have suffered as consumers have been snapping up foreign makes in record numbers.

Regardless of how the new relationship turns out, the move to acquire a portion of Lada points to further globalization of the automotive industry.