Analysts estimate the deal for the Warsaw-based plant to produce Chevy Aveo cars may be worth $252 million
General Motors is in talks to buy a 40 per cent stake in a Polish carmaker from Ukraine’s leading auto manufacturer AvtoZAZ. The US and Ukrainian car companies are negotiating for a share of the Warsaw-based Fabryka Samochodow Osobowych (FSO) car manufacturer, according to a Sept. 10 Financial Times report.
Analysts speculated that the value of the deal, the details of which the Ukrainian side would not disclose, could be about $252 million.
AvtoZAZ admitted to holding talks with GM over a partnership but remained tight-lipped on the details.
Zaporizhya-based AvtoZAZ, Ukraine’s leading auto manufacturer acquired FSO in 2005. AvtoZAZ is 80 percent owned by Kyiv-based Ukravto Corporation, which is allegedly controlled by Ukrainian legislator Tariel Vasadze, honorary chairman of the corporation.
Ukravto officials said their corporation is “conducting negotiations about a partnership with General Motors Corporation…But since the negotiation process is not over yet, as for now we would like to refrain from official statements.”
The deal is centered on GM’s plans to launch a brand new Chevrolet assembly line at the Polish plant. It remains unclear, however, if GM will take an interest in either the FSO plant, or Ukravto’s assets in Ukraine. Neither side would discuss this possible aspect of the agreement.
Ukravto officials said their company planned to launch the assembly of Chevrolet Aveo cars at FSO in November of this year.
“We hope that by that date we [Ukravto] will reach final agreements and will publicly unveil them when this happens,” an Ukravto representative said.
At a press conference on Sept. 14 in Kyiv, Tariel Vasadze said that FSO has the capacity to manufacture up to 300,000 vehicles per year.
“This year the plant will manufacture more than 80,000 vehicles and next year it will produce 160,000 vehicles and already in a year we will reach full production capacity,” he added.
According to Vasadze, the assembly of Chevrolet Aveos would be situated at the FSO plant.
Mark Kempe, director of communications for GM Central and Eastern Europe, confirmed in a telephone interview with the Post that “GM has a contract with Ukravto and they will start manufacturing Chevrolet Aveo cars for GM… at [the] FSO plant in Warsaw in the next two months.”
The GM official said the Chevrolet Aveo cars to be assembled by FSO would be the first to be produced in the EU region. This year, up to 7,000 cars would be assembled; production would skyrocket to 60,000 next year, he added.
GM has in recent years boosted efforts to produce and sell cars in former Soviet countries, where car sales have swelled. The auto giant is currently mulling the possibility of launching additional production capacity in Russia, where its car sale volumes are reaching European market levels.
This year, GM expects to sell about 250,000 vehicles in Russia.
The corporation has been operating joint ventures for car assembly with AvtoZAZ in Ukraine and AvtoVAZ in Russia. GM said that it plans to launch the operation of a Greenfield plant in St. Petersburg in the second half of 2008.
