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GM, AVTOVAZ And EBRD Sign Joint Venture In Russia

Moscow. General Motors Corporation President and CEO, Rick Wagoner, today met with Russia’s Prime Minister, Mikhail Kasyanov. Wagoner visited Russia to sign a General Framework Agreement for the joint venture involving GM, Russian automobile manufacturer AvtoVAZ and the European Bank for Reconstruction and Development (EBRD). Also present were GM Europe President Michael J. Burns, GM Russia President David J. Herman, AvtoVAZ Chairman Vladimir Kadannikov and the EBRD First Vice-President, Charles Frank.

Under terms of the agreement, GM and AvtoVAZ each hold a 41.5 percent stake in the joint venture and the remaining 17 percent share is owned by the EBRD. The project is for $US332 million.

The vehicle, based on a Russian-developed platform, will be sold in Russia under the name of Chevy Niva. Production is expected to reach 75,000 units annually. The start of production in Togliatti, about 1,000 kilometers southeast of Moscow, is planned for 2002. Full capacity should be reached in 2004.

The venture plans to export up to 40,000 vehicles to Western and Central Europe and to Mexico, with possible exports to additional countries. No exports are planned to the United States or Canada.

“We’re looking forward to working with AvtoVaz on this promising new venture,” GM President and CEO Rick Wagoner said. “The Russian market has significant potential and we expect to participate fully in its growth through our partnership.”

GM will have day-to-day management control of the joint venture. The board of directors will include three representatives from GM, three from AvtoVAZ and one from the EBRD. The chairman will be selected by AvtoVAZ.

The GM, AvtoVAZ and EBRD executives also visited the AvtoVAZ plant and the Technical Development Centre in Togliatti, as well as the site of the joint venture adjacent to AvtoVAZ' premises, where work is already underway. The joint venture plant will be a state-of-the-art green-field facility. At full capacity, it will employ 1,200 people with an estimated 6,000 more in the supplier industry, all of them Russian. GM will appoint 13 international specialists to assist in the start-up. In order to fully leverage cultural and market know-how, Russian professionals are expected to assume senior management positions.

Wagoner also met with Konstantin Titov, Governor of the Samara Region, where the joint venture will be located and which will provide it with regional assistance.

Russia is one of the few countries of the world with sales exceeding 1 million units annually. In 2000, about 1,017,000 new passenger cars and light commercial vehicles were sold in Russia, of which 969,000 were locally produced and only 48,000 imported.

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