Renault receives ultimatum from Putin to fund AvtoVAZ

Article by Christian A., on August 29, 2010

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.

The layoffs have become necessary due to the 44% decline in sales of AvtoVAZ's Lada. If this pushes through, Putin will have a difficult time trying to avoid unrest due to the recession that followed years of incredible growth, says Autonews.

If you don´t know much about AvtoVAZ, it's a Soviet-era company that continues to produce the clunky Lada models on outdated 1960s equipment. It stays afloat only due to decades of state money injections.

When Renault purchased the stake, there was a twinge of hope that it will finally be modernized. It's just too bad that the economic downturn delayed restructuring plans.

Topics: renault, russia, avtovaz

If you liked the article, share on:

Comments

Recommended

The Honda Ridgeline pickup turned out to be a success when it first came out in the market. In the first half of 2017, the company has already delivered over...
by - July 28, 2017
Rolls-Royce has been around for decades now, and we have seen the Rolls-Royce Phantom for eight generations in the span of around 100 years. Of all models, this is probably...
by - July 28, 2017
The first time Porsche revealed the Panamera Sport Turismo to the public was during the 2017 Geneva Motor Show earlier this year. And now it has already entered production, and...
by - July 27, 2017
Autocar has got some juicy rumours for us regarding a new McLaren hypercar. The British publication has inside sources claiming that a new model will be added to the Ultimate...
by - July 27, 2017
Ferrari has recently launched the New Power15 extended warranty program. The company developed this program in response to the notion that supercars are very expensive to maintain. Truth be told,...
by - July 27, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries