GM Bids for 'Significant' Stake in Russian Automaker
General Motors said it has bid for a "significant" stake in Russia's biggest automaker AvtoVaz
"We have made a bid we consider to be appropriate," GM spokesman Marc Kempe said.
Kempe, who declined to specify the size of the bid or the offer, said GM was interested in exploring further cooperation with Avtovaz as one way to "expand our footprint in Russia."
GM has a joint venture with AvtoVaz at a Russian plant, which produces the Chevrolet Niva sport-utility vehicle and the Chevrolet Viva sedan.
Faced with declining demand in its home market, GM is looking to increase its presence in emerging markets such as Russia.
Russia is on track to become the biggest market in Europe by 2011, with annual demand reaching 3.3 million cars, according to forecasters.
AvtoVaz's parent, state arms exporter Rosoboronexport, is looking to sell a minority stake in the company to a foreign investor.
In addition to GM, the company is talking to Italian car maker Fiat
GM Chief Financial Officer Fritz Henderson last week told financial analysts that the top U.S. automaker should have moved earlier to localize "more production in Russia," JP Morgan analyst Himanshu Patel said in a note for clients.
Henderson said GM's profit margin in its European operations had been pressured in the third quarter in part because it did not have enough capacity in Russia, Patel said.
Booming demand in Russia raised GM revenue more than its profit because the automaker was forced to pay 25 percent import duties on vehicles it brought into the Russian market, Henderson was quoted as saying.
GM has forecast that Russia will grow to become Europe's second-largest car market after Germany next year. GM aims to sell around 250,000 cars in Russia this year.