VIENNA – GM-AvtoVAZ, a joint venture between General Motors and Russian Lada-maker AvtoVAZ, today officially breaks ground for an expansion of its car plant in Togliatti, Russia. 

The new facility will be located in the Special Economic Zone about 1.9 miles (3 km) from the original plant.

For Jeffrey Glover, outgoing managing director of GM-AvtoVAZ, the expansion is one of the most important moments of his time at Togliatti.

“The thing I am really excited about is that we got the new project approved by the shareholders,” Glover tells WardsAuto, “which means approved funding for the next-generation Chevrolet Niva and a facility that includes the press and body shops."

Glover arrived at a difficult time for Togliatti in December 2009, during the global economic crisis. Now he is leaving for Germany as director-Project Accelerate Opel/Vauxhall at Adam Opel in Rüsselsheim.

There are more achievements by Glover and his team: “We regained segment leadership last year” he says. “We added back the 2-shift operation after the (economic) crisis, we had record sales and production results last year (and) we have set a benchmark for efficiency in GM International Operations.

“We have a low-cost business model, and we proudly defend it,” he adds, noting there is more market competition than just a couple of years ago. “We need to turn over our expenditures two or three times in our hands before we spend it.”

The quality of the cars built at Togliatti has improved markedly, he says. “Over the last two years, we have registered 80% fewer customer claims. The Niva has never been better.”

The first GM-AvtoVAZ plant, which is located within the extensive AvtoVAZ facility, receives welded bodies for its Chevrolet Niva small cross/utility vehicle from there. The JV last year manufactured 62,981 vehicles, up 9% from 2011 and a new record.

Sales amounted to 63,023 units, including 2,744 deliveries in other Commonwealth of Independent States countries. The Niva is the best-selling Chevrolet model in Russia.

Glover describes the current production process of the Niva: “The bodies are stamped (at AvtoVAZ); then they are welded; then transported by a truck to another (nearby) shop, where the welding of parts like doors, the tailgate and hood takes place. And then it comes through the wall to us.

“We have our quality engineers on AvtoVAZ’s side of the premises to make sure we are getting good quality. And that business model works. We already do this sort of play, and today we are replicating the play we already have.”

Total investment in the expansion is slightly more than RR6.4 billion ($200 million). In addition to the press and body shop, the new site will include engineering support facilities. It also will nearly double GM-AvtoVAZ’s staff.

“When we announced it last year, we were just under 1,500 people,” Glover says. “The whole project will take us close to 3,000 in total.”

With the expansion, GM-AvtoVAZ’s capacity will be increased to 120,000 vehicles annually.

“Now, can we fill all of that? Glover asks rhetorically. “That will be difficult, but we need to take our time to grow with the market. We will make sure there is demand at the price levels we will sell our vehicle in order to be profitable.”

Once the new operation is completed, GM-AvtoVAZ will introduce the second-generation Niva. The original model was developed by AvtoVAZ and unveiled as the Lada 2123. It later was modified by GM and sold under the Chevrolet brand.

The upcoming model has been developed differently. “We have very capable engineers,” Glover says. “We are using CAD software Catia and Unigraphics and we are using a design house in Italy.”

The Italian design studio Bertone, which participated in a facelift of the current Niva some years ago, helped with some early work on styling of the new model, “but we are using a different design house,” Glover says, adding the new model is almost frozen. “We are doing final refinements on the design right now. It is absolutely spectacular, the car.”