GAZ buys half of diesel engine maker VM Motori

[Bruce Nunnally]

CNN.com among others is reporting that the Russian company GAZ has purchased 50% of VM Motori. VM Motori is the source of the new turbo diesel engines to be used by Cadillac.

LONDON -(Dow Jones)- Russian car and truck maker OAO Gaz Group (GAZA.RS), owned by Russia's billionaire Oleg Deripaska, has bought a 50% stake in Italian diesel producer VM Motori S.p.A, and formed a joint venture with General Motors Corp. (GM), which owns the remaining half of Motori, the companies said Wednesday. Mike Arcamone, vice president of GM Powertrain Europe said in a statement: "Our joint venture agreement with GAZ Group provides business opportunities to expand our diesel engine business with new customers".

GAZ will now build a manufacturing facility in Russia to produce VM Motori designed engines.

[Cadillac Jim]

Sounds like a Trojan Horse to me, a conspiracy to keep Russia using obsolescent technologies. The day of the turbo diesel as a big player in daily drivers has come and gone. GM needs them for the niche, and as part of a bridge to the future. Perhaps these make more sense in Russia, where filling stations may be hundreds of miles apart.

[Bruce Nunnally]

GAZ Group and General Motors Corp. Reach Joint Venture Agreement For Ownership of VM Motori

Cento, Italy – GAZ Group, one of Russia’s largest car manufacturers, and General Motors Corp., have reached agreement on a GAZ 50 percent equity ownership in VM Motori S.p.A., a designer and manufacturer of diesel engines based in Cento, Italy.

GAZ Group is acquiring the 50 percent equity stake of VM Motori, S.p.A., under a purchase agreement with Penske Corporation signed on August 27, 2008. This agreement is subject to clearance by the European Union Commission.

“This equity ownership agreement enables GAZ Group to access world-class diesel engine design and manufacturing,” said Sergey Zanozin, GAZ Group CEO. “It’s a highly promising investment opportunity, given the significant increase in demand for diesel engines in Russia and the positive business development of VM Motori globally.”

GM purchased its 50 percent equity share in VM Motori from Penske Corporation in 2007, after 10 years of collaboration with the company in supplying engines for its Opel brand products, in a technology agreement with GM Daewoo, and in joint development of a new 2.9-liter V-6 turbo diesel scheduled to launch in the Cadillac CTS in Europe in 2009, and in the most recent technology agreements for the manufacturing of VM Motori diesel engines in Thailand and Mercosur.

“Diesel engines have a very important role in GM's global advanced propulsion strategy,” said 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.”

The agreements enable GAZ Group to set up production of VM Motori engines under license in Russia for its range of light commercial vehicles, Gazelle and Maxus. In addition, local production will provide an opportunity to satisfy growing demand for light diesel engines from Russian manufacturers of road construction and agricultural equipment.

“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,” said Zanozin.

“We look with keen interest at the new joint venture between GM and GAZ,” said Vilmo Ferioli, CEO of VM Motori. “We believe GAZ Group will be a strong partner for GM in the VM Motori operation and the entry of GAZ Group as a shareholder brings with it the potential to develop our engine business particularly in new markets, ensuring future growth for VM Motori.”

VM Motori S.p.A., was founded in 1947 in Cento (Italy) and specializes in the design, development and manufacture of diesel engines for agricultural, industrial and marine applications. From the end of the 1970s, thanks to the adoption of particularly innovative technical solutions, VM Motori entered the automotive diesel market rapidly becoming a leading company in the sector. In 2007, VM Motori manufactured some 96,000 engines, 80% for export to automotive customers, giving a sales turnover of €400 mil. The company pays particular attention to research and development of the most advanced technical solutions.

[TDK]

Folks,

I'm no "World Economics" expert, (I think you have to be 100-miles from your home town to be "an expert"), but it seems that GM or any other company - that can gain partners across a multitude of countries "hedges their bets".

Simply put, the other players (Russia in this case) have a vested intrest in GM's success - as opposed to a non-partner. It is similar to selling real New York City real estate to Chinese investors. The Chinese investors need to make New York City a success to recoup their investments.

This is "Cut-throat Capitalism" at its finest form and function. You can bet their "little red books", that few of these former communist pary chiefs distribute any funds to the billions in the filelds back home.

It really is "World Economy", and we are just among the other players.

Turbo-diesels may indeed be an intermediate technology, so let them have it. Hopefully we can develop "leading edge technologies", and bring them to market.

All IMHO