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AvtoVAZ, Russia’s Largest Car Maker Stops Production

Lada parent company says stoppage due to parts shortage

 |  Feb 06 2009, 1:03 PM

Lada_priora_01.jpg

Caption: Lada Priora

According to an Associate Press report in The Detroit News, OAO AvtoVAZ, the maker of Lada vehicles, has shut down its production facilities.

Company spokesperson Natalya Sidoruk told AP that the company made the move because of a parts shortage. The reason for the shortage is of some concern.

Apparently suppliers are withholding shipments because they will no longer accept the promissory notes AvtoVAZ has been using. Instead suppliers want to be paid in cold hard cash.

Suppliers are worried about the car makers’ liquidity, as the company’s current debt sits at 18 billion roubles, or $516 million. AvtoVAZ president Boris Alyoshin has however stated that up until the production stoppage the company was in the black.

Still, AvtoVAZ is suffering just like every other automaker in the world with just 29,000 cars sold in January, down from 50,000 to 60,000 in the same period the year before.

Credit problems are not expected to cripple the company for long, however, as industry analysts believe the Russian government will help out. The government has already assisted the Russian auto sector by imposing significant trade restrictions on foreign automakers, increasing duties on vehicles coming into the country.

[Source: The Detroit News]