GM-Avtozaz deal on the rocks (05/26/96)

GM-Avtozaz deal on the rocks

KYIV - General Motors has rejected a 51 percent stake in Zaporizhzhia-based Avtozaz, but says it will provide around $800 million in investment capital to modernize Ukraine's premier auto maker m return for government guarantees and a clear promise that no other international manufacturer will be brought into the project, Interfax-Ukraine reported on May 17.

According to Stanislav Shcherbin, GM's representative in Ukraine, the U.S. auto giant's management was "unpleasantly surprised" to find that Avtozaz was holding talks with other companies, among them South Korea's Daewoo. Mr. Shcherbin, president of the joint venture General Motors Ukraine, said GM had declined an invitation to bid for the 51 percent stake, which the State Property Fund of Ukraine is looking to sell to a strategic partner.

Avtozaz, best-known for its now-discontinued twin-cylinder Zaporozhets, had asked GM to invest $110 million into a project to upgrade its new core model, the Tavria. GM, however, said it would rather invest $800 million in promising Avtozaz developments for trucks with 1.5- to 4-ton load capacities.

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