AvtoVAZ is reportedly seeking a credit of up to US$1bn from state bank VEB.

Reuters reported that a source familiar with AvtoVAZ's financial situation told reporters the credit would go toward financing AvtoVAZ's core activities and not to help it refinance debts.

Russia's largest car makers - AvtoVAZ , Gaz Group and KamAZ - have all turned to the state for help, with some halting production lines, citing a double-digit drop in demand, the report said.

The Russian government recently said it will support the country's automobile industry, which has seen a drop in activity, during the financial crisis.

The government will possibly subsidise interest rates on loans that car producers pay to banks, Russian President Dimitry Medvedev has said.

State assistance for Russian carmakers was written into a USD200 billion state aid package, including a provision to lower interest rates on loans taken by car manufacturers.

Early this month, the government also sharply raised import tariffs on second-hand foreign cars, a protectionist measure for which the industry has long lobbied.

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