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AvtoVAZ Back in the Game, Posts Profit

It seems like miracles do happen... After several months of fighting to survive, AvtoVAZ managed the impossible: it returned to profit, posting a net profit of 622m roubles (US$20m) for January-September against a net loss of 19.8bn roubles as compared to the same period of the last year.

If you're wondering how did that happen, it's probably because of the Russian government's involvement, as country officials continuously asked Renault, who holds a 25 percent stake in the company, to get involved and help the Russian carmaker stay alive. AvtoVAZ thus managed to deliver a total of 367,765 units in the first nine months of the year, which represents an increase of 36.5 percent against January-September 2009.

Estimates proved to be true after all because AvtoVAZ' restructuring plan hinted that the Russian brand should be able to post a 50 percent recovery this year. Russia increased its financial support in the company to EUR1.67 billion while French company Renault contributed with technology and equipment of around EUR240 million.

"All these measures will help AvtoVAZ to restore its margin and increase market shares of combined sales of Lada, Renault and Nissan in the Russian market. The Lada brand will constitute at least 70% of the total production volume of AvtoVAZ in Togliatti," it was mentioned in an official paper included in the restructuring plans.

Of course, prime minister Vladimir Putin must be delighted with the news, but AvtoVAZ is likely to continue its recovery in the months to come. We'll get back on the subject as soon as we receive some statements from Russian officials.


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