Three of Russia's leading carmakers, including auto giant Avtovaz, are to pool together under a new holding known as Rosavto, state-owned conglomerate Russian Technologies has announced.
AFP - Russia will create a new holding firm called Rosavto to manage three top auto companies that are facing a steep crisis in the country's car sector, a major state-owned conglomerate announced Tuesday.
The new holding would bundle together the state-owned stakes in car giant Avtovaz, truckmaker Kamaz and engine-builder Avtodizel, said a senior official with the conglomerate, Russian Technologies.
"This holding will consist of four subholdings," Igor Zavyalov, deputy head of Russian Technologies, said in an interview with Vesti-24 television.
Zavyalov said the four subholdings would include one for "light transport" based on Avtovaz, one for trucks based on Kamaz, one for engines based on Avtodizel, and one for auto parts based on other Russian Technologies assets.
Russian Technologies -- a vast conglomerate with assets in a broad range of sectors, whose management is seen as being close to the Kremlin -- owns 37.8 percent of Kamaz, 25 percent of Avtovaz and 30 percent of Avtodizel.
The Russian Technologies press service could not be immediately reached for comment and the company did not release any statements describing its plans in detail.
Media reports in recent days said that Russian Technologies was considering such a merger to help manufacturers survive the crisis by improving their efficiency and allowing them to obtain credit on better terms.
But an analyst with Moscow-based investment bank Alfa Bank, Georgy Ivanin, criticised the idea of merging Avtovaz and Kamaz.
"It is hard to see any synergy from the unification of the passenger car producer and the heavy truck maker," Ivanin said in a research note released before Zavyalov's announcement.
"The decision making process in both companies may slow as the management structure gets more complicated," he added.
The Russian car industry, a favourite of investors in recent years, has been hit by an unpredecented crisis due to plunging demand in what was once Europe's fastest-growing auto market.
Both Avtovaz and Kamaz suspended production in August in response to falling sales, while unconfirmed reports have suggested that Avtovaz is preparing huge job cuts in its work force of more than 110,000 people.
France's Renault owns 25 percent in Avtovaz, while Germany's Daimler 10 percent in Kamaz.
Date created : 2009-08-25