Renault ups Russian sales forecast, boosts capacity

French carmaker Renault is running its Moscow plant at full capacity to keep up with an expected 40 per cent rise in overall Russian sales to 2.7 million in 2011, its Russia chief said on Tuesday.

The company, in talks to take a controlling stake in Russia's flagship carmaker AvtoVaz , has identified Russia as its paramount fast growth market as consumer spending recovers from the recent financial and economic crisis.

"Most car manufacturers have revised their forecasts upwards to 2.6-2.7 million (for 2011). We think it will be closer to 2.7 million, the company's Russia chief Bruno Ancelin told reporters on Tuesday.

The Association of European Businesses (AEB), which monitors car sales in Russia, has a forecast of just 2.35 million.

Ancelin said the boost would come from "natural" growth supported by economic recovery as well as the long-running government-sponsored scrappage scheme, and predicted the market could reach a peak of 4 million units by 2015-2016.

Renault's plans to take over AvtoVaz, which had to be bailed out during the financial crisis in 2009, stem from its purchase of a 25 per cent stake in the firm for $1 billion in 2008.

Renault wants to take a 51 per cent stake alongside partner Nissan , and has received the blessing of the Russian government.

"Carlos Ghosn (CEO of the Renault-Nissan alliance) wants the negotiations to be concluded by the end of this year ... The next step is to buy another 25 per cent stake," Ancelin said.

He said he did not know what the main issues in the negotiations were, saying his focus is on the operational work between Renault, Nissan and AvtoVaz in Russia.

Ghosn told analysts last month that Renault could take a 35 per cent stake in AvtoVaz and Nissan 15 per cent, according to analysts at the presentation.

The shareholders that may sell are state-controlled Russian Technologies with a 36.5 per cent stake, while investment bank Troika Dialog owns 20 per cent.

Renault's standalone plant on the outskirts of Moscow is operating at its full 160,000-a-year capacity, Ancelin said, while plans to build Renault and Nissan own-brands at AvtoVaz's sprawling 900,000-a-year capacity plant are well advanced.

AvtoVaz will launch two new Ladas next spring, with the first Nissan to follow later in 2012. Renault cars could start to be manufactured at the plant in Togliatti, south Russia, the following year.

Western carmakers are being lured to Russia by state incentives as well as its under-developed car industry.

The government has offered to waive custom duties on imported parts if companies pledge to build at least 350,000 cars a year in Russia, while steadily increasing the percentage of parts sourced locally.

Volkswagen, Ford and Fiat are among players committing major investment.