New AvtoVAZ CEO, Bo Andersson, says the necessary building blocks have been established to ensure localised automotive production in Russia should reach 80%.
Andersson’s comments echo that of Deputy Minister of Industry and Trade of the Russian Federation, Alexey Rakhmanov, who this week reiterated the 80% localisation goal and highlighted the financial packages on offer to domestic and overseas automakers to invest.
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“In the last five years, the foundation has been laid for 80% of the product is produced in Russia,” Andersson told just-auto in Moscow on the sidelines of this week’s Russian Automotive Forum organised by Adam Smith Conferences.
“There is still a lot of bureaucracy that is unnecessary, very slow, but I see it changing as well. There is not a very good supply base and one of the things is to enforce it ourselves.”
The new Swedish chief has given his top staff three suppliers each on which to concentrate, adding every three weeks he will meet his top 500 managers to “cascade” his aims personally.
“People get engaged in what type of issues suppliers have,” said Andersson. “All our executives have three suppliers each and they need to report on their business and what they have heard – they are not negative processes.”
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By GlobalDataAndersson was only recently CEO of GAZ Group, where he implemented wide-ranging efficiency changes and he has lost no time in bringing some of that productivity drive to AvtoVAZ.
There will be cost reductions as managers, specialist and employee headcount falls by 2,500, although AvtoVAZ says this will be achieved through “natural turnover” and without redundancy.
“I did it [headcount] in the second week – we let off 20% of our management and 10% of our workers,” said Andersson.
The CEO – in line with other automakers – noted 2014 would be “difficult” but revealed AvtoVAZ had met its 100% production schedule for the first time this week (17 March) producing 2022 vehicles in one day.
“2014 will be difficult, but we need to prepare for the worst and plan for the best,” he said.
Current tensions between Russia and the West surrounding the political situation in Crimea and Ukraine formed a recurring theme to the Moscow conference, but Andersson is confident the issue will not affect AvtoVAZ.
“From a business standpoint, we sold 6,800 vehicles in Ukraine, so out of 500,000, it is a marginal thing,” he said.
“It [political situation] makes people spend less money [but] the weaker rouble helps AvtoVAZ much more than other carmakers.”
For this year, AvtoVAZ plans to introduce a new Lada Granta hatchback as well as a Lada Priora with robotic transmission, while 2014 will also see the company expand its Renault-Nissan Alliance production with three new models of Renault and Datsun brands.
