AvtoVAZ is accelerating the pace of redundancies at its Togliatti plant to around 13,000 as a sharply falling market takes its toll on OEMs and suppliers.
The Russian giant initially revealed it would slash its workforce by up to 10,500, but will now wield the axe further, meaning around 13,000 posts will be cut to leave staffing levels at 53,000 by the end of this year.
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The drastic pruning by AvtoVAZ comes as statistics were released yesterday (9 June) by the Association of European Businesses (AEB), showing a dramatic 12% plunge in new Russian passenger car and LCV sales last month.
“We are looking to cut more jobs at Togliatti,” an AvtoVAZ spokesman told just-auto from the automaker’s headquarters in the central west Russian city. “It is [due to] falling sales, the whole market is going down. Lada is going down, but we are better than the whole market now.
“In May, the market was down 12% and our sales went down by 10% – we are falling slower. It is a difficult decision. Cutting is always difficult because one person, 1,000, it is always difficult. It is a life, a person, his job, his family.”
Despite the huge layoffs, AvtoVAZ insists it will work with the local authorities to help those made redundant back to work, while the automaker is also claiming Togliatti has the lowest unemployment rate in rate in Russia at just 0.6%.
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By GlobalDataSince the start of this year, AvtoVAZ has implemented a raft of “urgent measures” to improve its economic performance, which saw it post losses of RUB6.9bn (US$200m) for 2013, with revenue also falling to RUB175bn in a contracting market.
These measures include adjustment of production, control and regulation of product stock, activities with working capital, dealers and purchasing price reduction, as well as what the carmaker terms “general cost reduction.”
Earlier redundancies centered on normal staff attrition, such as voluntary layoffs, retirement or transfer to other posts, but it appears that pace will now increase to achieve the 13,000 personnel reduction by the close of 2014.
To that end, AvtoVAZ says it has informed its unions of the plan as well as the Togliatti Employment Centre, as the Russian market continues to see the brakes slammed on its previous steep growth.
Sales data from the manufacturer show Lada numbers dropping 14% during the January-May period, although the automaker points to an improved May performance.
The figure for last month saw sales fall 10%, sharply better than April’s precipitous drop of 16% and a slight improvement on the overall Russian market decline of 12%.
AvtoVAZ points to the “adverse economic situation due to [the] crisis in the world’s economy,” although from a domestic perspective, political uncertainty caused by Russia’s stance concerning its annexation of Crimea and Ukrainian instability, may well be having a knock-on effect in consumer confidence.
Despite the gloomy raft of figures, AvtoVAZ is nonetheless highlighting the success of its Lada Granta family, which was extended last month with the introduction of the Liftback variant.
Around 2,000 Lada Granta Liftbacks were sold within the first two weeks of the car being on the market, increasing Granta sales share within AvtoVAZ from 35% to 38%.
