Automaker GAZ Group is planning production and staff cuts and expecting reduced profits.
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One fifth of its staff face the axe due to the credit crisis, Kommersant business daily reported on Monday, according to Reuters.
“Banks in Russia have not been lending to each other for more than a month now,” GAZ head Sergei Zanozin told the paper. “As a result, car buyers who took loans from smaller banks were cut off from that funding, and this whole chain, starting from our suppliers all the way to the end consumer, is broken.”
Reuters noted that GAZ Group, which is controlled by billionaire Oleg Deripaska, this month shut down production at its main factories manufacturing light commercial vehicles because of a 10% fall in demand.
Zanozin reportedly said full-year production could decline by 30% compared with 2007.
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By GlobalData“But at this point neither I nor the government can say with any certainty what will happen in November or December,” he told Kommersant. Staff count could be cut from 115,000 to 90,000, saving 450m roubles ($US16.64m) a month.
Full year earnings, before interest, tax, depreciation and amortisation may fall 40-50% year on year while revenues are set to drop 7-8%, Zanozin told the paper.
