AvtoVAZ is reportedly seeking a credit of up to US$1bn from state bank VEB.
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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.
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By GlobalDataState 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.
See also: EMERGING MARKETS ANALYSIS: Fixing AvtoVAZ starts with new product
