GM’s Russian JV Takes New-Gen Chevy Niva Off Shelf

ST. PETERSBURG – General Motors shores up its diminished presence in Russia by reviving plans to build a second-generation Chevrolet Niva CUV with its local joint-venture partner AvtoVAZ.

The project calls for annual production of 120,000 vehicles in the city of Togliatti, where AvtoVAZ produces Lada vehicles and some Nissan and Renault models. It will be financed with a RR12 billion ($280 million) loan from VTB, one of Russia’s largest banks. Sales launch in mid-2016, with specialized versions of the model to go on the market later.

GM-AvtoVAZ also will join AVTEC, part of India’s Birla Group multinational conglomerate, to build an engine plant under license from French automaker PSA Peugeot Citroen. AVTEC and Russian manufacturer ZVD had formed a joint venture, AZ Powertrain, to supply the Niva with PSA-designed 1.8L EC gasoline engines under an agreement signed in 2014.

The automakers launched the new-gen Niva project in 2013 and a prototype was unveiled in September 2014 at the Moscow auto show. But they suspended it earlier this year amid Russia’s ongoing economic crisis and GM’s decision to close its St. Petersburg plant that assembled Chevrolet and Opel models. At the same time AvtoVAZ had expressed concern the Niva would cannibalize sales of other company products such as its flagship Lada 4x4.

GM-AvtoVAZ has started testing the new model in Europe, says Jeffrey Glover, the JV’s general director. Agreements with suppliers are to be signed over the next 30 days.

Despite GM’s shutdown of Chevrolet and Opel assembly and sales operations in Russia, and limiting its imports to Cadillac products and the U.S.-built Chevy Corvette, Camaro and Tahoe, the Chevy Niva is one of the country’s best-selling CUVs.

According to Association of European Business data, Niva deliveries totaled 16,432 units from January through July, making it Russia’s third best-selling CUV after the Renault Duster (23,338) and Lada 4x4 (21,901). Prices vary from RR519,000-RR600,000 ($8,000-$9,000).

GM-AvtoVAZ produced 19,070 Nivas in first-half 2015, down 13.7% from year-ago.