General Motors and Avto VAZ of Russia
General Motors (US) and Avto VAZ (Russia) are, in the spring of 2001, in the final stages of forming a joint venture (JV) for the manufacture of a new automobile in Russia, the Chevy Niva. The car would be largely the result of Russian engineering and construction with limited GM input and the GM Chevrolet badge. The JV, if completed, would represent a $300 million combined investment by the parties and be a totally new approach used by Western investors in penetrating emerging markets.
The case focuses on the continuing negotiations between two of the world's largest automobile manufacturers. At the time the case was written (spring 2001), the events were essentially real-time, as GM and Avto VAZ had yet to formalize their final joint venture agreement. The case is most useful in debating the prospective risks and returns to a Western multinational entering the Russian marketplace, and the risks and returns to a major Russian power working with a Western firm which is highly suspicious of Russian capabilities.