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Posts Tagged ‘AvtoVAZ’
August 3rd, 2016

Barefoot Toward an Empire

Photo by vladtime.ru

AvtoVAZ plant / Photo by vladtime.ru

The news of the suspension of production at the major Russian car manufacturer AvtoVAZ in Togliatti, on the Volga River, neither comes as a surprise nor dominates the front pages. Considering the current economic situation this is quite logical: AvtoVAZ is not the first car maker in Russia to recur to this option. The Ford Sollers plant in Vsevolozhsk, the Volkswagen plant in Kaluga, Peugeot, Citroen, Mitsubishi, and other automobile manufacturers have suspended production at one time or another. It is obvious that even Putin’s KGB friend Sergei Chemezov, the current CEO of the Rostec state corporation that controls more than 700 machine building and defense plants in the country, including AvtoVAZ, cannot force Russia’s drastically impoverished population to buy new cars. It is also clear that the problem lies not with AvtoVAZ itself—whose Lada cars are world-famous for their low price and their simplicity—but with the overall crisis in the Russian economy that is suffering because of low oil prices and Western economic sanctions imposed in response to the military aggression against Ukraine.

Despite the assurances by Putin’s press secretary in early 2015 that “the fall in sales will be followed by a rapid growth,” the situation so far is the opposite. According to the Russian Auto Dealers Association, the automobile market has lost 40 percent of its model range in the last two years—and that is not the limit. Even the once-popular and inexpensive Ford Focus dropped out of the top 25 models sold in Russia, and the top rankings are now held by the cheapest cars that are two decades behind the 2016 European economy-class vehicles in terms of quality and technology. Even the sales of these “naked” cars are >> Read more

June 16th, 2016

Putin’s Regime Thumbs its Nose

Russian Prime Minister Dmitri Medvedev during a visit to Crimea. Photo by A. Pupysheva / kafanews.ru

Russian Prime Minister Dmitri Medvedev during a visit to Crimea. Photo by A. Pupysheva / kafanews.com

On May 23, during a visit to Crimea, Russian Prime Minister Dmitri Medvedev made a fool of himself with a cynical and provocative phrase that quickly became one of the most popular hits on Russian Internet. Answering the question from an elderly lady about why pensions are not being raised, Medvedev, without so much as a thought, retorted: “There’s simply no money. If we find the money, we will raise pensions. You hold on here, I wish you all the best, good spirits and good health.” But the money is lacking not only for pensioners: all those who had for years depended on the needle of “Putinomics” are experiencing problems.

Russia’s largest car manufacturer, AvtoVAZ, is once again finding itself in a difficult situation: beginning on June 6, its workers were transferred from a four-day to a three-day week; layoffs of between 5,000 and 8,000 people are expected. According to AvtoVAZ’s report, the company’s debt arrears of more than 45 days after the first quarter of 2016 has reached 25.3 billion rubles—3.8 times greater than during the same period of 2015. The company’s total debt to suppliers and contractors during the same period amounted to 66.5 billion rubles (including arrears of 25.3 billion.) After the first quarter of 2016, the company’s net loss has increased 48 times, reaching 8.6 billion rubles. To cover its losses, AvtoVAZ will ask its French partner, Renault-Nissan, for a loan of 20 billion rubles. If it is unable to pay that loan back, AvtoVAZ will have to pay with its shares and assets. >> Read more

April 7th, 2016

From Pikalevo to Togliatti: Small Towns, Big Problems