Pirelli JV Factory to Supply AvtoVAZ

The announced joint venture tyre plant to be established by Pirelli and Russian Technologies will have an initial capacity of 4.2 million tyres, states Pirelli – and sources indicate that a large chunk of production will be supplied to Russian carmaker AvtoVAZ. The facility, to be built in a new industrial estate in northwest Togliatti, in Russia’s Samara region, will be located near the giant AvtoVAZ factory, which is majority controlled by Russian Technologies. The regional government plans to make the industrial estate a special economic zone, in which investors are granted tax concessions.

In March AvtoVAZ announced plans to attract more than 50 automotive parts manufacturers to the industrial estate. Bringing in Pirelli is a concrete step in fulfilling that plan, a Russian Technologies spokesman commented on condition of anonymity. Since the plant will be located in close proximity to AvtoVAZ, Ladas will be assembled with Pirelli tyres, he said. According to the Moscow Times, a Pirelli spokeswoman has disclosed, again on condition of anonymity, that the terms of the joint venture also give both partners equal control of a Russian company managing the factory and selling tyres in the country.

Last year output at the AvtoVAZ factory totalled 900,000 vehicles; however, following the purchase of a 25 per cent share in the company by Renault in March 2008, the French carmaker stated it plans to boost production to 1.5 million units by 2014. According to Bank of Moscow analyst Mikhail Lyamin, drawing on Pirelli’s experience will aid AvtoVAZ in its goal of improving the quality of the cars it produces. Lyamin added however that investing in tyre production purely for AvtoVAZ would not interest Pirelli. If they are building a plant in Russia, they are counting on replacement tyre sales in Russia,” he said.