Fresh from its defeat in the bidding for a stake in Russian automaker AvtoVaz, GM is now trying to get a chunk of a Russian truckmaker, Gaz, with an eye toward a joint venture to produce passenger cars in Russia. It’s competition last time was Renault, which won, and Fiat. This time, the competition is the new Chrysler.
The chief executive of Gaz told the Financial Times that it is “no secret” his company is talking with Chrysler about a joint venture. The company already buys engines from Chrysler and will be issuing a rebranded version of the old Sebring as a Russian built car next year. According to the CEO, Leonid Dolgov, "f we are successful with this first pilot with Chrysler, we would like to see how we could be of value to each other in the future".
But there may be other influences at stake, and those would favor GM, at least on the surface.
Dolgov also stated that his company has signed a “letter of intent” with General Motors to build a low-priced vehicle for the Russian market. GM, however, declined officially to confirm the statement.
Gaz is controlled by Oleg Deripaska, quietly but quickly becoming the Don Corleone of the car business. Deripaska, who is closely linked to Russian premier Vladimir Putin and is reputed to be a member of the “Russian mafia” has taken a controlling interest in Magna, the Canadian-based parts maker who is one of the major suppliers to Chrysler for its American production. Deripaska has also acquired 5% of the outstanding common stock of General Motors.
General Motors currently is the largest producer of automobiles in Russia, and Ford is second. However, the Kremlin’s powers that be – in other words, Putin and his buddies – are thought to want to develop several Russian auto manufacturers to elbow their way into the market.
The financial interest which Deripaska has in GM, however, may provide some protection for the company’s ventures in Russia from future government intervention – perhaps even as Deripaska’s investment in GM gives him some protection against Putin.