General Motors Corp. reaches a joint-venture agreement with GAZ Group, a deal where the Russian auto maker gains a 50.0% equity stake in diesel-engine designer and manufacturer VM Motori SpA.

The deal with a local partner strengthens GM’s position in Russia’s diesel market among light-commercial vehicles and presents future opportunities for collaboration and export globally.

GM ranks as the largest non-Russian auto maker in the country. Marc Kempe, GM’s spokesman in the region, says the auto maker sees “considerable potential” for additional growth and continues to explore ways to increase its manufacturing capacity in Russia.

“Having a strong partner with the ability to build diesel engines in the country is clearly a benefit,” he tells Ward’s.

GAZ Group obtains ownership in the Cento, Italy-based VM Motori from Penske Corp. for an undisclosed amount.

GM bought its 50.0% share in the company last year from Penske. Prior to that, VM Motori supplied diesel engines through a technology agreement with GM Daewoo Auto & Technology Inc. to the auto maker’s Opel brand in Europe over a 10-year period.

GM and VM Motori most recently collaborated on a new 2.9L turbocharged diesel engine for the Cadillac CTS, which the auto maker will launch in Europe next year. GM also will build VM Motori diesel engines in Thailand and Mercosur, according to another recent technology agreement.

“Diesel engines have a very important role in GM’s global advanced propulsion strategy,” says Mike Arcamone, vice president-GM Powertrain Europe. “We are leveraging expertise and resources within our company and through technology partners like VM Motori to ensure we develop the world’s best powertrains.

“Our joint venture agreement with GAZ Group provides business opportunities to expand our diesel engine business with new customers,” he says in a statement.

The agreement, which faces the scrutiny of European regulators, would allow GAZ Group to manufacture VM Motori engines under license in Russia for its lineup of light commercial vehicles, Gazelle and Maxus.

Local production also provides GAZ Group an opportunity to meet demand for light diesel engines from Russian manufacturers of road construction and agricultural equipment, according to the agreement.

“Through localization of diesel-engine production, we will achieve the strategic goal of creating a full range of diesel engines to meet existing and future customer and environmental requirements for both Russian and global markets,” GAZ Group CEO Sergey Zanozin says.