AvtoVAZ and Sollers Plan Joint Supply Network

Carmaker AvtoVAZ has teamed up with Sollers to set up a joint network of component suppliers in what some say is a political decision rather than a significant move toward cooperation.

"AvtoVAZ and Sollers intend to develop a joint program to develop a network of component suppliers and develop the human resources potential of the car industry," the firms said in a statement posted on their web sites.

The carmakers have come under government pressure to team up to modernize their production lines as they recover from a recession that sent domestic car demand into a tale spin.

Friday's statement was short on details, however, and the carmakers wouldn't give any details on the arrangements or say which suppliers would make the cut.

"Our goal is first to define the stock list of the components that offer possibilities for cooperation," said Zoya Kaika, a spokeswoman for Sollers. "As soon as we are clear on that, we will carry out audit checks of local suppliers or may start discussing the possibility of attracting foreign manufacturers."

She added that full details of the project would be released within a few months.

AvtoVAZ is already developing a joint components network with French carmaker Renault, which owns a 25 percent stake in the company, and Nissan. The partnership with Sollers is not part of that project, but it will not create a conflict of interest, Renault spokeswoman Oksana Nazarova said.

Although details are still forthcoming, the deal is unlikely to result in a significant increase in cooperation between the two companies, said Sergei Udalov, executive director of Avtostat.

"Suppliers of components are traditionally extremely jealous when it comes to sharing any of their know-how with third parties," he said. "So what the two companies will most likely do is set up a unified list of components from which technology can be shared without losses."

Instead, the arrangement looks to be more political in nature, designed to assure the government that the carmakers are doing what's necessary to modernize.

"It now seems to be a purely political statement aimed to show the government that carmakers are willing to undertake a joint effort to rebuild the local car sector," Udalov said.

Carmakers have been eager to please the government and win favorable concessions by teaming up with partners — especially foreign — to help modernize their production lines.

Earlier this month, Italian carmaker Fiat and Sollers signed a deal to create a joint venture in Tatarstan, while Germany's Daimler increased its stake in truck maker KamAZ.

"Following the collapse of the Opel acquisition [by a Sberbank-led consortium], the Fiat-Sollers and AvtoVAZ-Renault-Nissan consortia have likely been chosen as national champions in the car segment," VTB Capital said in a research note earlier this month.

AvtoVAZ hopes that the deal will put pressure on suppliers to follow the carmakers' lead by modernizing their facilities and raising the quality of their product.

"We aim to move the quality of our components and final product to a new level, as is demanded by international car markets," AvtoVAZ spokesman Igor Burenkov said. "We want our cars to be on the same level as the world car industry, and our suppliers should move in the same direction."

Staff writer Maria Antonova contributed to this report.