Last week the head of Russia's Federal Industry Agency, Boris Alyoshin, said AvtoVAZ and Magna had signed a draft agreement on establishing a joint automotive assembly plant in Russia's Volga Region.
On Thursday the AvtoVAZ board of directors approved a framework agreement with Magna to design and produce C-class cars, with an estimated production launch date in late 2009.
Alyoshin said last week that the plant's planned output is 450,000 cars per year.
He also said that the agreement on building the plant in Togliatti, where AvtoVAZ is based, is planned to be signed this year, and investment in the project will total 1.5 billion euros.
Magna designs and manufactures auto parts, and engineers and assembles complete vehicles, primarily for sale to major U.S. and European car manufacturers.
Alyoshin said Magna will design and develop about half of the plant's planned output, i.e. about 200,000-220,000 cars annually, adding that the details had been set out in the draft agreement.
"They will be C-class cars both of Russian and foreign production," Alyoshin said.
AvtoVAZ produced 721,500 cars in 2005. Domestic sales reached 704,000 cars, and export sales amounted to 96,500 cars during last year.