Automaker AvtoVAZ was formed from a collaboration between Fiat and the Soviet Vneshtorg (Department of Foreign Trade), and is based in the city of Tolyatti on the Volga River. Both sides discussed the proposal in Moscow, where Gianni Agnelli, the owner and nephew of the founder of Fiat, and Vittorio Valletta, the president of the company, had arrived from Italy. The first preliminary agreement was signed on 1 July 1965. On 4 May 1966, the Soviet minister of the automotive industry Alexander Tarasov and Vittorio Valletta put their signatures on a protocol on the scientific and technical cooperation between Fiat and the Soviet ministry. Eventually, a general agreement between the two sides was signed in Moscow on 15 August 1966. Fiat's subsidiary Comau supplied many of the automation systems in the plant.

The company began producing the VAZ-2101 in 1970, which was a more rugged version of the Fiat 124 sedan. The car was given heavier steel body panels and strengthened components, which improved reliability on bumpy roads and in the harsh winters of the Soviet Union

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