Renault Chief Operating Officer Patrick Pelata has reportedly said the situation in the Russian automobile industry is 'just terrible'.

His remarks about the state of the automotive industry in Russia - where sales this year are around 50% of last year's level - were reported by Dow Jones.

Pelata told DJ that prices are going up and Renault's market share is going up.

"This isn't good news for the bottom line of Renault yet," he said.

AvtoVAZ is preparing a cost-cutting plan that will be implemented by its new Russian chief executive, who recently replaced a Renault manager, Pelata added.

Speculation has risen that troubled AvtoVAZ is preparing to make many thousands of its workers unemployed.

However, some analysts believe that the big numbers quoted in the press may be part of a plan to secure more financial assistance from the Russian government.