AvtoVAZ is to cut production of Lada models over the next three months by 25,000 because of falling demand for new cars in the domestic market.

The carmaker made 47,100 Ladas last month as well as 12,100 for its alliance partners Renault and Nissan.

A company statement said: "Because of the decrease in sales of all cars in the Russian market, and in order to better manage inventory levels, AvtoVAZ made a decision to reduce production of Lada cars in September, October and November for a total amount of 25,000."  AvtoVAZ said its workers would continue to receive their full salaries in the next three months.

Sales of Russia's top-selling brand fell 16% to 220,822 vehicles during the first seven months of the year, according to the Association of European Businesses (AEB). Last week General Motors said it would reduce production at its plant close to St. Petersburg and was reviewing its expansion plans in the country.

Car sales have stalled in Russia this year along with economic growth. Consumer concerns have also come under pressure because of Western sanctions over the crisis in Ukraine. In July overall vehicle sales fell 23% year-on-year following a 17% drop in June. Lada sales were down 25% to 28,014 in July according to the AEB figures.

Last year AvtoVAZ made 438,400 Ladas and 20,800 Renault and Nissan models.