The Russian automaker and the Canadian car parts manufacturer plan to build a plant in the Volga city of Togliatti where AvtoVAZ is based, which will put out 450,000-480,000 cars annually, with investment totaling $1.6-1.7 billion.
AvtoVAZ CEO Sergei Chemezov said the deal signing marks a significant stage in the development of AvtoVAZ.
"This will allow AvtoVAZ to create a whole series of new models, and to strengthen positions on the domestic and international markets," he said.
Magna designs and manufactures auto parts, and engineers and assembles complete vehicles, primarily for sale to major U.S. and European car manufacturers.
AvtoVAZ produced 721,500 cars in 2005. Domestic sales hit 704,000 cars, and export sales amounted to 96,500 cars during last year.
