AvtoVAZ said recently it would pay for supplies of car components with its bills of exchange if suppliers do not reduce the cost of components by 10%, business daily Vedomosti reported on Monday, citing a letter from Damir Kashapov, purchasing vice president at Russia’s largest automaker.
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Those suppliers that agree to cut prices will be paid in cash, the daily reported.
Around 75% of suppliers have already agreed to reduce prices of car components, an AvtoVAZ representative told Vedomosti.
The carmaker earmarks over 70% of its expenditures for purchases of car components and raw materials, the representative added.
AvtoVAZ started paying for supplies with bills of exchange at the end of last year, which evoked discontent from suppliers. The carmaker accumulated a 25bn ruble debt to suppliers as of January. As of now, the company has only 1bn rubles in overdue debt remaining, the representative said.
Russian carmaker SOK Group is reluctant to reduce prices, company representative Dmitry Rumyantsev told the daily. Plastik, one of the largest suppliers of plastics to AvtoVAZ, doesn’t plan to accept bills of exchange and is currently in talks with the automaker, CEO Maxim Simonov told the daily.
Earlier this year, the carmaker was forced to suspend production several times due to lack of components after suppliers declined to accept bills of exchange.
