AvtoVAZ says there will be no further layoffs as the automaker estimates Russia sales for 2015 will be between 1.5m and 1.7m vehicles, with economic conditions continuing to provide choppy water for producers in the country.
Russia is being battered by an unprecedented storm of high interest rates and inflation, a rapidly sinking rouble, an oil price that has virtually halved and the imposition of international sanctions by foreign governments furious at its annexation of Crimea and supposed involvement in East Ukraine.
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That potent cocktail has spooked Russian consumers, with recent numbers from the AEB in Moscow showing February sales plunging 38% with no end in sight, although the depreciating Rouble is creating more opportunities for domestic producers as imports become more expensive.
“In the economy [car] segment we can be competitive – it can only get better,” AvtoVAZ CEO, Bo Andersson, told just-auto on the sidelines of this year’s Russian Automotive Forum in Moscow.
“I still say we will have a market between 1.5m and 1.7m. It is an opportunity for Lada.”
Andersson also took time to praise the Russian government’s efforts in aiding the challenging situation.
“The Russian government is very clear on what they do – they provided Decree 166 [mandating local Russian content] – that more or less changed the Russian automotive landscape,” he said.
“Now it is up to management. I always ask government for help, but first we need to do our own job.”
Since Andersson’s relatively recent tenure at the helm of the Russian giant, AvtoVAZ has slimmed its workforce quite considerably, although its downsizing does not appear to have provoked industrial unrest in a way that could potentially be imagined in the West.
“Laying off people is always difficult,” said Andersson. “We had a huge inventory of cars – we had two months of sales at [the] plant. We laid off 31% of white collar [staff] and reduced our cost structure by taking out ten thousand workers.
“We don’t accept stealing – we in-source [and] we are working hand in hand with the unions. There will not be further lay-offs.
“For me, last year we did lay-offs, this year we are working on productivity.”
The AvtoVAZ chief also outlined new export markets for the automaker such as Kazakhstan, Azerbaijan, Ukraine and Germany where it enjoys good relations with local partners.
“What I am totally against is selling markets [where] the partners we don’t understand,” said Andersson, who also noted the relationship with Renault was “working very, very well.
“They are an owner, customer and supplier,” said. ” We fight all three battles and I am happy with them and I hope they are happy with me.”
