TOLYATTI, Russia — Russia's largest car maker, OAO AvtoVAZ, and Canadian auto parts maker Magna International Inc. signed a memorandum of intent on Friday to jointly develop a new budget model and build a plant.
The project will require investment of around 1.5-billion ($2-billion U.S.), AvtoVAZ chairman Vladimir Artyakov told President Vladimir Putin during the signing ceremony in the Volga River town of Tolyatti, the home of Russia's car industry.
It will be a car based on new components and new technologies, and we hope that the price for the basic model will be less than $12,000, Mr. Artyakov said.
The parties agreed to set up modern design and development processes and produce sedan, estate and hatchback models at a new car assembly plant, he added.
AvtoVAZ, already in a joint venture with General Motors Corp., had also named French car makers Renault SA and Peugeot SA among its potential partners.
Earlier this year, Magna secured a $1.54-billion investment from a firm controlled by Russian billionaire Oleg Deripaska, an owner of aluminum giant UC Rusal and Russia's second-largest auto maker GAZ Group.
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