Russian GAZ Draws VW into a Joint Venture

With the outlook for the Russian market being positive, the auto makers who have big plans for the future now intend to include the country in their expansion measures. Volkswagen, the declared contender to the number one spot by 2018, announced this week that it would enter a joint venture with local auto maker GAZ, which would give it access to the expanding market.

According to just-auto.com, the two companies are planning an equally owned joint venture, which would be in charge with manufacturing 300,000 vehicles each year. The model slotted for production come from throughout the Volkswagen group and include the Volkswagen Jetta, the Skoda Octavia and Skoda Yeti. Word is that the joint venture will use the GAZ plant in Nizhny Novgorod for the production of the models.

The news of the new joint venture has not been officially confirmed, but judging by the haste with which global auto makers (like Ford, GM or Toyota) are rushing into the country, the joint venture would only come as a natural choice for the Volkswagen group.

Whereas in 2009 Russia was among the worst hit countries in the world and paid a very high tribute to the economic crisis, the recovery is expected to be worth all that pain and sorrow. Analysts predict that Russia would grow by an average 8 percent each year by 2020, selling over 3 million cars each year starting 2013.

If that rate of growth continues (and provided countries like Germany come to a freeze when it comes to the market growth), Russia might even become the largest market in Europe by 2018.