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AvtoVAZ Restructuring Plan Presented

Following a top level meeting in Paris last week, attended by Serguey Chemezov, AvtoVAZ chairman, Igor Komarov, AvtoVAZ president, Christian Esteve, Renault vice president and Serguei Skvortsov, Troika Dialog director, the rescue plan intended for AvtoVAZ materialized into a memorandum of understanding signed between the involved parties.

The memorandum states the following:
  • Russia will increase its financial support for AVTOVAZ from 25 to 75 billion roubles (1.67 billion euros)
  • the Samara regional government will take over the payroll costs for the 14,600 employees
  • Renault will give AvtoVAZ 240 million euros, through the transfer of technologies, production machinery, equipment and expertise in support of the production of new vehicles based on the B0 (Logan) platform. The French carmaker will also help AvtoVAZ create a Lada Classic replacement.

Of course, all these measures to be taken are aimed at several different goals. First of all, the Togliatti plant will expand production capacity to 900,000 vehicles per year by 2015. The carmaker also plans on retaining its market share in Russia at 25 percent and develop export operations.

"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," the document says.

What was not yet made public is the cost of manpower the restructuring plan will have. Still, until the final agreement is signed in March 2010, further details on the plan are expected to surface.


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