Russian Automaker GAZ Pushes for U.S. to Lift Sanctions

Treasury Department moving to accelerate process.

by on Dec.27, 2018

Russian automaker GAZ is looking to get the U.S. to lift sanctions off the company so it can do business here.

The Russian and U.S. governments are discussing lifting the U.S. sanctions on a Russian automaker, GAZ, which is part of a holding company in which a prominent Russian oligarch, Oleg Deripaska, has a key stake.

The talks aimed at lifting U.S. sanctions on Russian automaker GAZ are ongoing with the U.S. Treasury Department, and the company is implementing internal measures to encourage the process, Russian Finance Minister Anton Siluanov said, according to Reuters.

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The U.S. Treasury extended a deadline for investors to divest from GAZ to March 7, a day after it announced it would lift sanctions on the core assets of Deripaska’s empire — Rusal, the world’s second largest aluminum company, and its parent En+ of which GAZ is also a part.

GAZ was organized in the 1930s by the government of the old Soviet Union, which contracted with the Ford Motor Co. for vehicle designs and expertise and went on to produce a wide range of sedans and trucks.

(Mercedes-Benz adding Russian suppliers for new plant. Click Here for the story.)

After the fall of the Soviet Union, the company was privatized and Deripaska, who has long had an interest in the global auto industry, emerged as one of its principal shareholders more than a decade ago.

For years it also has been seen as an experienced partner by western automakers interested in moving into the Russian market. The potentially lucrative Russian market, which includes countries once connected to the old Soviet Empire, has never lived up to western expectations.

General Motors Co., which had used GAZ as a contract manufacturer, withdrew from the Russian market, earlier in the decade. citing the slow growth in the Russian economy.

(Click Here for details about Daimler’s new plant in Russia.)

Volkswagen AG and Daimler AG, however, have maintained close ties to GAZ.

Volkswagen boosted its presence in Russia two years by tapping GAZ to build VW and Skoda models as well as commercial vehicles as the automaker positions itself for a rebound in the Russian market.

VW has extended a deal with Russia’s GAZ group to assemble VW brand and Skoda cars until 2025. As part of the agreement and now supplies 2.0-liter diesel engines to light commercial vehicles made by GAZ, making it a critical customer for the company’s diesel technology, which has been hobbled by scandal in North America, East Asia and Western Europe.

(Nissan running with the bulls in Russia. For the story, Click Here.)

A Mercedes-Benz-GAZ venture builds the Sprinter under a licensing arrangement after Daimler AG put up 100 million euros for production facilities and sales support. Local content is around 40% by value and the assembly plants created about 1,000 new jobs in Nischni Nowgorod and at the engine factory in Jaroslawl, according to analysts.

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