AvtoVAZ to reduce Russian workforce by 11%

Article by Christian A., on January 26, 2014

Russian carmaker AvtoVAZ plans to reduce its workforce by 11 percent, or around 7,500 jobs, as it bids to keep profitable in a slumping economy that is hurting the domestic car market, chief executive Bo Andersson, said in a statement. He also remarked that the carmaker has developed "urgent measures" to adjust production, cut costs and tighten control over inventory and working capital.

The biggest cuts will involve manufacturing jobs, with around 5,000 positions to be trimmed via attrition, a hiring freeze and redistribution of the workforce between divisions. The remaining 2,500 will involve managers, specialists and office workers, according to the statement.

"All of AvtoVAZ's processes are being revised," Andersson said. New car sales in Russia dropped 5.5 percent to 2.78 million in 2013, the Moscow-based Association of European Businesses said in a statement, adding that it may fall further to 2.73 million vehicles this year. Sales of AvtoVAZ's Lada brand dropped 15 percent to 456,309 vehicles in 2013. AvtoVAZ reported in October 2013 that it posted a first-half net loss.

Renault-Nissan, AvtoVAZ’s new owners, is planning to capture market share by shifting Lada models upmarket. The Russian government recently disclosed plans to provide up to RUR271 billion ($8 billion) in subsidies for Russian carmakers in the three years to 2016. Andersson was named as chief executive of AvtoVAZ on Dec 31, 2013, with a mission to achieve a target set by Renault-Nissan CEO Carlos Ghosn of a 40 percent combined market share in Russia for the three carmakers by 2016.

Topics: avtovaz

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