Russia's Largest Automaker To Halt Production

[Lt-Col A. Tack]

Russia's Largest Automaker To Halt Production

By Nataliya Vasilyeva, AP Business Writer
Manufacturing.Net - March 04, 2009
MOSCOW (AP)

AvtoVAZ, Russia's largest car maker, said Wednesday it has stopped production at its main factory once again due to a renewed dispute with parts suppliers.

The main factory in Togliatti halted production indefinitely due to a lack of parts, AvtoVAZ spokeswoman Natalya Sidoruk told The Associated Press.

The dispute between AvtoVAZ, 25 percent owned by France's Renault SA, and its suppliers has been raging for months. AvtoVAZ is paying suppliers an estimated 70 to 80 percent in promissory notes, with the remainder in cash. Observers have said suppliers want to get paid in cash in full, as the credit crunch shows no signs of easing.

Production was halted Tuesday afternoon and resumed Wednesday morning, but stopped several hours afterwards.

"We are negotiating with the suppliers, and as soon as we reach an agreement we will resume production," Sidoruk said.

The Togliatti plant was idle for several days in early February when the suppliers halted deliveries, urging AvtoVAZ to pay them in cash.

The car maker, whose models include the iconic Lada, is suffering from low sales as the financial crisis dents the country's wealth.

AvtoVAZ sold 29,000 cars in January this year, compared to a monthly average of 50,000 to 60,000 cars before the financial crisis.

The company is believed to be heavily in debt. It owed 18 billion rubles ($497 million) at the end of September, but AvtoVAZ president Boris Alyoshin insisted last month that the company was doing well despite problems with cash flow.

Until the production halt, AvtoVAZ operated with two shifts four days a week. Employees not involved in manufacturing have been put on leave at two-thirds pay.

Healthcare and Social Development Minister Tatyana Golikova announced Wednesday that 3,200 AvtoVAZ employees are expected to be laid off soon, Russian news agencies reported.

Some 12,500 are currently on forced unpaid leaves, she said at the upper house of the Russian parliament.

The Russian government rode to AvtoVAZ's rescue in December, sharply raising duties on imported cars to protect domestic carmakers.

Analysts sounded confident that the car maker would get a bailout from the government no matter what it does.

"The government and AvtoVAZ have special relations," said Mikhail Pak of the Moscow-based brokerage Metropol. "I have no doubt that AvtoVAZ will get some state financing -- in the form of loans or subsidizing their borrowings."

The state corporation Russian Technologies owns a quarter of AvtoVAZ after selling a 25 percent stake to Renault last year. Investment bank Troika Dialog owns another 25 percent. The remaining quarter is floated on the market.

The number of households that own a car dropped 2 percent to 39 percent in 2008 compared to three years earlier, the VTsIOM polling agency said Wednesday.

Since 2006, the share of those who own a Russian car has declined from 75 to 63 percent, according to the poll.

Link (http://www.manufacturing.net/News-Russia-Largest-Automaker-To-Halt-Production-030409.aspx)

[Lt-Col A. Tack]

Looks like GM and Chrysler aren't the only ones having trouble.
Anyone own a AvtoVAZ or have any experience with one?

I hope we can keep this civil. Let's forgo with flaming

Like the US government, I would imagine the Russian government to offer assistance.

[Big D]

my grand dad owned a Lada. :(

[Lt-Col A. Tack]

my grand dad owned a Lada. :(

Get a chance to drive it? Reliable?

[zheka130]

I guess if Abramovich and Derepaska were given money due to the deterioration of the financial situation (even though they are billioners) AvtoVaz has get help - the biggest domestic car manufacturer

and no Ladas are not very reliable

[Lt-Col A. Tack]

I guess if Abramovich and Derepaska were given money due to the deterioration of the financial situation (even though they are billioners) AvtoVaz has get help - the biggest domestic car manufacturer

and no Ladas are not very reliable

Thanks, I'd heard the name, but that was about it.

[little icebear]

Well, at least Ladas are easy to repair. Got some second hand experience. Watched fixing one. Not too difficult.

[kerfuffled]

Get a chance to drive it? Reliable?
A friend of mine had one about 18 years ago. It was a POS and he abandoned it.:)

[Lt-Col A. Tack]

Does AvtoVAZ have a successful product?

[little icebear]

Not anymore. Back in the 80s they had some cars that could do what they were supposed to do.

[Lt-Col A. Tack]

Thank you, sir.

Just wondering why wouldn't / couldn't the Russian gov't do more; contracts for government officials' vechicles, and the like?

[asch]

Get a chance to drive it? Reliable?
it's a quickly rusting piece of sh!t. VAZ have an incredibly useless R&D department and only government interruptions allow them to float alive for last two decades, producin ugly derivatives of Sovier era cars.

[omghihi]

Thank you, sir.

Just wondering why wouldn't / couldn't the Russian gov't do more; contracts for government officials' vechicles, and the like?

I believe at some point they already forbid importing foreign vehicles

as for the former soviet cars, well outside has changed, inside has not. unreliable and not even comfortable compared to western cars. but they'll work just fine if you got the skills to maintain and fix them.

some Moskviches have quite a lot in common with earlier BMW-s btw. motor block cover, electronics, and various other details I don't remember. in 1990s when there was a shortage of spare parts, quite often they were interchangeable.

[MaverickCowboy]

what about Volga?

[asch]

what about Volga?
same thing, AVTOVAZ production.

[eskachig]

Get a chance to drive it? Reliable?Those things are a cliche for a reason, ugh.

[TheArmenian]

same thing, AVTOVAZ production.

No.

Avtovaz makes Lada (in Togliatti)
Gaz makes the Volga (in Nizhni-Novgorod)

Two different companies.

[TheArmenian]

The good and the bad about Ladas

GOOD

Inexpensive to buy
Cheap spare parts
Low operating costs
Easy to repair (simple cars).Any mechanic or handyman can repair

BAD

Antiquated designs
Low on features
Not very aesthetic
Uncomfortable ride/drive

[PeterRJG]

The good and the bad about Ladas

GOOD

Inexpensive to buy
Cheap spare parts
Low operating costs
Easy to repair (simple cars).Any mechanic or handyman can repair

BAD

Antiquated designs
Low on features
Not very aesthetic
Uncomfortable ride/drive

Don't they come with their own toolkit? My cousin's Samara did.

[Teymuraz]

Avtovaz produces cheap cars, that are popular in Russia due to its price and easy maintenance(basically you can do everything yourself). The main problem is that producing cheap cars is good for Russia, where a lot of people still cannot afford expensive cars, but really need something to ride. Plus Avtovaz and otheer companies that supply the production with spare parts, providing services for them etc are employers for about 2 million people. That is why Avtovaz is still afloat and is getting major governmental financial and political(for example high import fees) support.
At the same time, management of Avtovaz were and are so sure about their future that they actually forgot about the fact they are living in 21 century now, and that there are plenty of very good cars around. They do not want to upgrade production, they are 20 years late with new models, new technologies in cars. Saving cheap cars production is one thing, making new cars, that could compete with others in the middle price segment is what they had to do, but never even tried to. So yes, cars are not good, not really reliable, easy to maintain, cheap, but i wouldnt buy one unless i had no money for anything better.

Gaz is owned by oligarch Deripaska, and the situation there is not really different from VAZ. But at least they are trying to do something. Some time ago they bought production line of Chrysler Sebring(prebious generation) and now selling em as Volga Siber here, in Russia. Although i do not trust the quality of these cars, but still its better then Lada for sure=)

Overall, Russia's car production sucks, and unless they change their policy they will be destroyed by imported cars, and then 2 million people will face problems, meaning government will face problems as well, and thats not nice=)

[zheka130]

wasnt a law passed that imported cars are now taxed 50% more, to help domestic producers?

thats why there were protests in the far east, quickly dispersed by OMOH

[Sufficient]

The good and the bad about Ladas

[...]

Inexpensive to buy

Yes perhaps, but they don't last long and their resale value drops with 90 percent as soon as the first buyer gets his keys. That's why they are impossible to sell in Western countries and I guess that is also the reason why Russians seem to prefer second-hand import cars. A 2002 model Toyota or a 2009 model Lada? Easy choise.

[perdurabo]

Looks like GM and Chrysler aren't the only ones having trouble.
Anyone own a AvtoVAZ or have any experience with one?

I hope we can keep this civil. Let's forgo with flaming

Like the US government, I would imagine the Russian government to offer assistance.
You know they are in same technological league...p-) (altough my friends Lada was realy relible, while my parrents Opel was piece of sh*)

[eskachig]

(altough my friends Lada was realy relible, while my parrents Opel was piece of sh*)Lada is kind of like an old BMW in this regard - if you know what you're doing, and understand what kind of preventative maintenance to do and when, those cars will last forever.

I'd still take an old BMW though.

http://www.youtube.com/watch?v=D_0X6mJ4SXA&feature=related

Looks like a pretty decent base for tuning though.

And the mighty zaporoghetz!

http://www.youtube.com/watch?v=55hdmB2140g&NR=1

[eskachig]

Top Gear LADA project - this is the same car my family had in the mid 80's.

http://www.youtube.com/watch?v=tVZqtQXBS1c&feature=related

And here is the same segment in Russian, hilarious translation actually.

http://www.youtube.com/watch?v=0sd-UEYMSIw&feature=related

[dimasorokine]

My grandfather had a LADA for over 20 years (same car), put over 600,000 KM on it and never has a serious problem...Of course he always properly maintained it, and knew exactly how to fix it when something was wrong.

These cars are made for the average Russian who does't mind fixing his own car and actually reads the technical manual and makes use of the repair kit...

So yes, by western standards its a "POS"

-Dima

[non]

some Moskviches have quite a lot in common with earlier BMW-s btw. motor block cover, electronics, and various other details I don't remember. in 1990s when there was a shortage of spare parts, quite often they were interchangeable.
Wasn't there some relation between Ladas and Fiat(many years ago, ofcourse)?

[Teymuraz]

yes first AvtoVaz models were actually old Fiats.
http://en.wikipedia.org/wiki/Fiat_124
like this one.

[MZKT]

Gaz is actually pretty successfull with the Gazel van.

[Mousepad]

Gaz is actually pretty successfull with the Gazel van.

Xerox from Ford Transit, but yes successfull. Btw Volga-Siber project is closed due to crisis situation.

[perdurabo]

Lada is kind of like an old BMW in this regard - if you know what you're doing, and understand what kind of preventative maintenance to do and when, those cars will last forever.

I'd still take an old BMW though.

exactly, in those cars anything could be fixed with simple tools in backyard garage, and if you knew what you do it could last ages. With Renault Megane(from 1997) i had driven recently few things i could do myselfe (change oil and few minor things like that) but anything bigger i would have to ride to shop luckily this car is reliable enough(not perfect but better than Opel Ford or Fiat)

[ayanami_tard]

Lada is kind of like an old BMW in this regard - if you know what you're doing, and understand what kind of preventative maintenance to do and when, those cars will last forever.

that would be skoda

or datsun:)(gotta love datsun.my father used it before switching to local made car.i hope i'll get the datsun and i don't mind the maintainance)