General Motors plans to invest in Russia's fast-growing car market with a bid for a stake in the country's biggest car manufacturer, Avtovaz.

Sales of foreign brand cars in Russia have risen by more than 60 per cent this year, in line with the increasing wealth of the country's middle class.

A GM spokesman told The Wall Street Journal that the company had made a "competitive" offer for a "significant stake" in the company, which owns the famous Lada brand, as part of its efforts to extend its presence in Russia.

Executives at Avtovaz have previously made public that the company plans to offer a stake of just under 25 per cent to a strategic Russian investor and a similar holding to a potential partner in the car industry. The company, which has a market capitalisation of around $4.9 billion, is owned by Rosoboronexport, a Russian arms export agency.

Lada has lost market share in recent years as Russian consumers look for more upmarket models. In 2005 Lada accounted for 51.8 per cent of the cars sold in Russia. That share dropped to 37.5 per cent last year and Lada is expected to finish 2007 with just 26 per cent.

US-based GM's brands have sold well in Russia, with sales of more than 250,000 this year, up from 132,000 last year. GM's Chevrolet is Russia's best-selling foreign brand and its Opel unit is the fastest-growing.

European car groups are also looking to invest in Russia, with industry analysts anticipating that Russia will become Europe's second-biggest car market by sales, after Germany, by the end of the year.

Italy's Fiat previously expressed an interest in investing in Avtovaz. Germany's Volkswagen opened a factory in the country last week and France's Renault assembles cars in Russia as part of a joint venture with the Government.

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