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AvtoVAZ plans to cut Lada production in next 3 months

AvtoVAZ is planning to trim output of its Lada cars in the next three months by 25,000 units due to dropping demand for new vehicles in Russia. According to AvtoVAZ, it built 47,100 Ladas and 12,100 Renault and Nissan vehicles in July. The company is controlled by the Renault-Nissan alliance.

The Russian carmaker saw sales of Lada vehicles drop 16 percent in the first seven months of 2014 to 220,822 units, according to data from the Moscow-based Association of European Businesses (AEB). The carmaker remarked in a statement that its workers would still receive their full salaries in the next three months.

AvtoVAZ is not alone in making the move. General Motors recently announced that it would cut production at its factory near St. Petersburg and was reviewing its expansion plans in Russia.

Read the entire article AvtoVAZ plans to cut Lada production in next 3 months

Renault-Nissan-AvtoVAZ expected to resist weakening ruble in Russia

Analysts believe that Renault-Nissan-AvtoVAZ will be able to withstand the effects of a weakening ruble resulting from the Russia's dispute with Ukraine. A weakening ruble along with a lingering undersupply of locally made parts could affect revenues of foreign carmakers in Russia, as imported parts could become more costly.

The Renault-Nissan alliance, which holds a majority stake in AvtoVAZ, boasts of components localization nearing 100 percent. "Renault may even benefit from price increases forced on less localized peers," Barclays wrote in a report last week. "Renault benefits from a very high level of local sourcing in Russia so that we are fairly protected from the devaluation of the ruble," a company spokeswoman told Automotive News Europe.

The weakening ruble as well as quavering consumer sentiment is already affecting the 2.8 million-unit Russian car market this year even if new sanctions imposed on the country don’t arrive. IHS Automotive is now expects the Russian vehicle market to drop 7 percent this year, from a 3-percent fall forecasted earlier this year before the Ukraine crisis escalated, remarked Carlos Da Silva, IHS’s manager for light vehicle forecasts in Europe.

Read the entire article Renault-Nissan-AvtoVAZ expected to resist weakening ruble in Russia

AvtoVAZ to reduce Russian workforce by 11%

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.

Read the entire article AvtoVAZ to reduce Russian workforce by 11%

Bo Andersson will take over as CEO of AvtoVAZ on December 31

Bo Andersson will be the chief executive of Russian carmaker AvtoVAZ, maker of Lada cars, starting December 31, 2013. Andersson, who is succeeding Igor Komarov, will be the first non-Russian to become the top honcho of AvtoVAZ, which is seeking to deepen its link with the Renault-Nissan alliance. The move was announced by AvtoVAZ through a statement following a board meeting led by Renault-Nissan CEO Carlos Ghosn.

Andersson is currently the CEO of Russian truckmaker and contract maker GAZ Group. Andersson’s mission will be to achieve a 40 percent combined market share in Russia for AvtoVAZ, Renault and Nissan by 2016 -- a target set by Ghosn. Renault and Nissan are currently in the process of acquiring indirect 74.5 percent control of AvtoVAZ under a deal inked in 20112.

Under the agreement, Renault and Nissan would invest RUR23 billion ($710 million). Andersson was a former top purchasing manager at General Motors Co., but left the carmaker in 2009 after Oleg Deripaska tapped him to help restore earnings at GAZ. Andersson was able to reorganize GAZ’s plant in Nizhny Novgorod and made production more competitive. He is also credited for convincing GM, Volkswagen Group and Daimler to build vehicles on its assembly lines.

Read the entire article Bo Andersson will take over as CEO of AvtoVAZ on December 31

The board of Russian carmaker AvtoVAZ has “nominated” Bo Andersson as a possible candidate to replace outgoing chief executive Igor Komarov. Andersson was chief of General Motors Co.'s global purchasing, logistics and supply operations, becoming CEO of bus and truck maker GAZ Group in 2009. In a statement, AvtoVAZ said that board members including chairman Carlos Ghosn – who is CEO of Renault and Nissan -- would recommend Andersson as a potential CEO candidate at the next board meeting.

Renault-Nissan is planning to take control of AvtoVAZ in mid-2014. The Wall Street Journal, citing undisclosed sources, dubbed the board's decision a "nomination" that is "virtually certain to be ratified at the company's next board meeting in early November." Andersson told the Journal via a spokesman that it was "premature" to talk ahead of the board meeting. Andersson has been credited with turning GAZ around by implementing cost-cuts that boosted profits.

AvtoVAZ disclosed that Oleg Lobanov, vice-president for finance, will serve as acting CEO until the board names a new top honcho. According to sources close to AvtovVAZ, Komarov was exiting the carmaker to join a division of Russia's space agency.

Read the entire article AvtoVAZ to nominate Bo Andersson as next CEO

AvtoVAZ, the largest auto manufacturing company in Russia, posted RUR2.6 billion ($80.7 million) in net losses in the first half of 2013, compared to RUR27.4 billion in profits in the same period in 2012. The carmaker’s dismal financial performance in the first six months of 2012 has been attributed to the economic slowdown in Russia, which in effect resulted to the slump in vehicle demand in the carmaker.

New-car sales in Russia have dropped for six straight months. The Association of European Businesses (AEB) lobby group recently revised downward its sales forecast for the full year 2013 to 2.8 million vehicles, reflecting a drop of 5 percent year-on-year. While this year’s first-half net loss came from lower car sales and increased investments in new models, profit in 2012 was heavily boosted by a non-cash gain from discounting the cost of future debt payments.

As a result of lower sales, AvtoVAZ logged a 7-percent fall in revenue year-on-year to RUR83 billion. The Russian carmaker had earlier said that its sales in Russia slid 10 percent in the first half of the year to 226,729 units. Western carmakers like Ford Motor Co., General Motors and Fiat Group have made heavy investments in Russia in the past years, wagering that the vehicle market will surge as owners update their units.

Read the entire article AvtoVAZ logs RUR2.6 billion net loss in first half of 2013

Steve Mattin, AvtoVAZ Design Director, plans to lead a styling revolution at Lada to transform the brand’s image. Mattin is aiming to achieve the same feat accomplished by Kia design boss Peter Schreyer in transforming the South Korean brand’s image. Mattin remarked to Automotive News Europe that Kia's rapid sales gain through strong emphasis on design is what he wants to replicate at Lada, which is the best-selling brand in Russia.

Lada’s models have been lashed for having a dull and obsolete design. In fact, The Lada Niva sports utility vehicle has remained virtually the same since it was launched 37 years ago. Mattin said Lada “is now changing and will be clearly seen in the future." He told Automotive News Europe that Lada will undergo an intensive modernization with the introduction of a completely new design language and DNA aimed at changing the image of the brand.

Mattin began his design career with Mercedes-Benz. He was the design head at Volvo from 2005 to 2009. AvtoVAZ named him its design director in 2011. Mattin said that while his challenge AvtoVAZ is the same with the one he had at Volvo -- to give the brand a more desirable look.

Read the entire article AvtoVAZ design chief Steve Mattin wants styling revolution for Lada

Renault-Nissan chief executive Carlos Ghosn is now the chairman of the AvtoVAZ board, the French carmaker said in a statement. The previous chairman and currently head of Russian Technologies, Sergey Chemezov, is now vice chairman. Ghosn's appointment is part of a deal that entails Renault and Nissan taking a majority stake in a joint venture with Russian Technologies that will control 74.5 percent of AvtoVAZ by mid-2014.

Ghosn is hoping that AvtoVAZ could help increase Renault-Nissan’s sales in Russia, where demand for vehicles is expected to further surge in coming years. Demand in Russia is even expected to surpass that in Germany by 2014. The high potential of Russia for further sales growth have reached the attention of a number of carmakers like Renault, Volkswagen Group, Ford Motor Co., prompting them to expand capacity in the country.

Following a meeting of AvtoVAZ general shareholders, Ghosn remarked that the Renault-Nissan alliance is committed to providing the resources and expertise “necessary to transform AvtoVAZ into a world-class” carmaker.

Read the entire article Carlos Ghosn named as chairman of the AvtoVAZ board

Even as the vehicle sales of Russian carmaker AvtoVAZ fell, it was still able to post a net profit of 700 million rubles ($23 million) in the first half of the year, compared with a loss of 500 million-ruble in the same period last year. In the first six months of the year, AvtoVAZ sold 250,732 vehicles, a 14% drop. The automaker produces Lada cars, which are the top-selling cars in Russia.

Lada’s sales fell due to the termination of a state-backed car scrappage program intended to support local carmakers. The company, which is scheduled to be taken over by Renault and Nissan by 2014, increased prices on July 1. It expects sales in Russia to drop by about 9% this year to 525,000-530,000 vehicles.

PricewaterhouseCoopers anticipates that the total market in Russia will increase by 4% this year to approximately 2.6 million vehicles and Russia is on course to become the largest car market in Europe by the middle of the decade as increasing incomes and a rise in consumer spending drives demand. In addition, AvtoVAZ said last Friday that there’s a 23% increase in its earnings for the first-half before interest, taxation, depreciation and amortization to 5.4 billion rubles.

Read the entire article AvtoVAZ returns to profit

The net profit of AvtoVAZ increased more than 100% in 2011 to 6.7 billion rubles or $215.75 million, Russia's biggest automaker disclosed. The company, which manufactures Russia's bestselling Lada units, also revealed that revenue rose 27% to 175.1 billion rubles last year on increased demand for the brand.

The Renault-Nissan alliance announced earlier this month that it would shell out around $750 million to take a majority holding in AvtoVAZ, together with Russian Technologies Corp. The companies are targeting mid-2014 to complete the transaction. The investment will include around $300 million from Renault and the rest will be from Nissan.

Renault already has 25% of AvtoVAZ through a 2008 purchase for $1 billion. Nissan and Renault's Carlos Ghosn is seeking to the Russian company to help boost fuel growth in Russia. The country may outperforming Germany as the largest market in the European region, as the Russian market is expected to go as high as 4 million annual sales in 2015, thanks to increasing incomes and a heave in consumer spending that take consumers toward showrooms.

Read the entire article AvtoVAZ net profit more than doubled in 2011 to $215.75 million

Russian Technologies Corp. will sell its majority holding in AvtoVAZ to the Renault-Nissan Alliance. This means that joint venture will then be the largest shareholder in Russia's biggest automaker. When combined, Renault and Nissan will invest around $750 million to take a majority holding in the joint venture, which will own 74.5% of AvtoVaz in turn.

Renault will provide $300 million of the investment while Nissan will give the rest. In 2008, Renault has already bought 25% of AvtoVAZ for $1 billion. The companies are hoping to finalize the agreement by the middle of 2014.

Carlos Ghosn, who heads both Renault and Nissan, is hoping that AvtoVaz will help boost its growth in Russia where the market could reach 4 million annual sales in 2015, beating Germany to become Europe's biggest due to increasing incomes and a sudden improvement in consumer spending.

Read the entire article Renault-Nissan to take an indirect majority stake in AVTOVAZ

Renault-Nissan and Russian partner AvtoVAZ have opened a new production line at the Russian company's facility in Togliatti. According to Renault, this new line has a capacity of 350,000 units per year, and it will manufacture vehicles for the three brands. This is the sixth production line at the Togliatti facility, which is the largest vehicle plant in the world.

This plant is located 1,000 km southeast of Moscow. It has a capacity of 1.5 million units each year. Renault sees big opportunities in Russia due to the low car ownership rate at 230 automobiles per 1,000 individuals, which is less than 50% of the number in France. Also, Russians do their best to acquire a new vehicle as a symbol of social success.

Renault anticipates completion of its purchase of a majority share in AvtoVAZ at the end of April after buying a 25% share in the company in 2008 for $1 billion. CEO Carlos Ghosn at Renault-Nissan stated that the vehicle manufacturers will benefit as Russia increasingly becomes the economic engine of growth in Europe.

Read the entire article Renault-Nissan, AvtoVAZ open new production line at Togliatti plant

The alliance of Renault SA and Nissan Motor Co. is aiming to reach a deal next month to assume a dominant ownership of OAO AvtoVAZ, according to two people who are familiar with the situation. AvtoVAZ is the largest vehicle manufacturer in Russia. Currently, Renault owns 25 percent of the Russian automaker while Nissan doesn’t have any at all.

Renault may increase its ownership to 35 percent, giving Nissan 15 percent, the alliance’s spokesperson Rachel Konrad disclosed citing the comments made by Carlos Ghosn, CEO of both Nissan and Renault, to analysts during a presentation last Monday.

The additional 10 percent share of Renault and the 15 percent share of Nissan would be worth around $415 million, based on the current market value of AvtoVAZ.

Read the entire article Renault-Nissan alliance to asume control of AvtoVAZ this month

Renault SA is likely to increase its ownership of AvtoVAZ, the largest vehicle manufacturer in Russia, to 35 percent, while Nissan Motor Co. may obtain 15 percent, Carlos Ghosn, the chief executive officer of the Renault-Nissan alliance, disclosed during a presentation to financial analysts of the six-year business plan of Nissan.

The company did not previously announce to the public the specific breakdown of the shares that the alliance sought in the Russian company.

The alliance has been in talks with the shareholders of AvtoVAZ in order to obtain major ownership of the Russian firm, which manufactures Lada cars. Ghosn has flagged the completion of the deal by the end of 2011.

Read the entire article Renault likely to raise stake in AvtoVAZ to 35 percent

In the first half of the year, AvtoVAZ was able to become profitable once again with a net profit of 3.1 billion rubles ($102 million). The Russian carmaker attributes the revival to state assistance and the improvement in the market. Last Tuesday, AvtoVAZ, which makes Russia's top-selling Lada model at the town of Togliatti, said that it benefited from interest-free loans given by state-controlled Russian Technologies.

In addition, car sales had been climbing. From January to June of 2010, revenue grew to 62 billion rubles compared to 53.1 billion posted in the same period in 2009.

VTB analyst Vladimir Bespalov said that the situation is “improving” and that the “second half is likely to be better.” At this time last year, AvtoVAZ was on the brink of bankruptcy as car sales plummeted amid the global economic crisis.

Read the entire article AvtoVAZ returned to profit in the first half with a net profit of $102 million

Everyone's waiting to see how French automaker Renault SA would respond to Russian Prime Minister Vladimir Putin's ultimatum to help Russian automaker AvtoVAZ or see its stake reduced. Putin said in front of government officials that Renault has to help fund the enterprise or its stakes would have to be divided.

It can be recalled that Renault had bought a quarter of the state-run firm for more than $1 billion a couple of years ago. Putin is putting his foot down for good reason.

AvtoVAZ, Russia's largest automaker, will implement the largest set of layoffs in a single Russian city and plans to cut a quarter of its staff (roughly 27,600 workers) in Togliatti.

Read the entire article Renault receives ultimatum from Putin to fund AvtoVAZ

The action of AvtoVAZ shareholders to rescue the near-bankrupt company came just in time. A rescue deal is set to be signed by the parties on Friday.

The signing, which is participated in by Russia's state-controlled investment group Russian Technologies, Moscow bank Troika Dialog and Renault, will coincide with Russian Prime Minister Vladimir Putin's visit to the French capital.

Russian Prime Minister's deputy chief of staff Yuri Ushakov told reporters about the parties expressed willingness to ink the agreement. Christian Esteve, leader of Renault's Eurasia management committee, is confirmed to have agreed to sign the agreement on Friday.

Read the entire article Renault to sign a rescue deal for the near-bankrupt AvtoVAZ

Due to the economic crisis, plans came up for AvtoVAZ's factories to build Nissan's B segment cars starting 2012. Vitaly Vilchik, AvtoVAZ's acting vice president, said that the company intends to assemble one of the 'B' class models offered by the Renault-Nissan alliance. Nissan is an alliance partner of Renault, which holds a 25 percent stake in AvtoVAZ.

According to an unnamed source, Nissan presented an offer to organize the assembly of its cars at the AvtoVAZ factory in the Samara region.

This summer, Nissan opened a $200 million car plant in Russia's second city of St Petersburg, with a capacity of 50,000 vehicles annually.

Read the entire article Russia’s carmaker AvtoVAZ plans to build Nissan cars