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Russian Carmaker Lada Stops Production at All Its Plants

Lada is well known for its ability to withstand the test of time, even though its cars are not at all reliable. Their simplicity and lower prices are what attract new buyers. Now, after a fresh series of sanctions hit, it’s stopping production at all its three plants in Russia. But not for long.
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Lada’s not giving up on making new cars as a sign of protest. The automaker knows where it’s doing business and is not planning on being a martyr. Moreover, one of the main shareholders, Rostec, is very, very close to Vladimir Putin because of chairman Denis Manturov’s ties with Kremlin.

A spokesperson quoted by British news outlet The Telegraph said they’re currently “following the ongoing situation very carefully”. Whatever that means, it’s clear that Lada’s been struggling recently. Not even Renault, who controls Lada’s parent company Avtovaz, can help it now.

The plants in Moscow, Togliatti and Izkevsk are now closed and will remain as such until the company can secure more chips and other important parts that come from Europe and the U.S.

Giving some hope to shareholders, employees, and customers, Lada said this would only be a temporary situation. It plans on keeping the plant in Moscow shut for a week, while the other two will be opened again next week on Wednesday. It’s not clear how Lada’s planning on doing this because all exports to Russia have been stopped by Europe and the U.S. Moreover, its only allies left in the world (China, Pakistan, Eritrea, Belarus, and Venezuela) are not very well prepared to fill in the void.

Lada’s sales improved in 2021, especially because of the UK and thanks to the artificial price raising that came from saying parts are hard to find. Profit margins grew exponentially, but now they risk losing any kind of progress.

Unfortunately, this also impacts French carmaker Renault. Fitch thinks a Lada failure will bring more cash problems.

It remains to be seen how Lada will eventually navigate this whole situation.

 
 
 
 
 

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