By JOSEPH SZCZESNY
Of The Oakland Press
The Penske Corp. has sold its 50 percent equity stake in an Italianmaker of diesel engines to a Russian carmaker for an undisclosed sum.
Bloomfield Hills-based Penske is selling its portion of VM Motori, S.p.A. of Centro, Italy to GAZ, one of Russia's largest carmakers.
Terms of the agreement were not disclosed, but VM Motori had sales of about $600 million last year.
The agreement makes GAZ a partner with General Motors Corp. in VM Motori. GM had acquired a 50 percent stake in VM Motori from Penske in the summer of 2007. GAZ is partly owned by Russian aluminum tycoon Oleg Deripaska, who last year acquired a large stake in Magna International Inc.
"We will retain management control," said Sharon Basel, a spokeswoman for GM's Powertrain Group in Pontiac. "We've had management since we purchased the 50 percent control from Penske last year.
"We believe this does provide an opportunity to expand the customer base of VM Motori in Russia and other areas as well," Basel said.
Prior last year's purchase of a controlling stake from Penske, GM had collaborated for more than 10 years with VM Motori in supplying engines for its Opel brand products and in a technology agreement with GM Daewoo.
In addition, the GM-VM Motori partnership has developed a new 2.9-liter V-6 turbo diesel scheduled to launch in the Cadillac CTS in Europe in 2009, and produced 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.
"Our joint venture agreement with GAZ Group provides business opportunities to expand our diesel engine business with new customers," Arcamone said.
Last year, VM Motori produced 96,000 engines and 80 percent were exported to Opel and other customers around the world, Basel said.
"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," he said.
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 and specializes in the design, development and manufacture of diesel engines for agricultural, industrial and marine applications.
Contact Joseph Szczesny at (248) 745-4650 or
joe.szczesny@oakpress.com.
