The lack of parts and supplies necessary for the construction of cars stopped the production activities of the two factories that Avtovaz, the manufacturer of Lada brand vehicles, maintains in Russia. The plants are operated by the French Groupe Renault, a company that holds a majority stake of 67.6% in Avtovaz.
Lada brand cars are one of the main symbols of Russian industry and are frequently used in propaganda photos by Russian President Vladimir Putin. Avtovaz has been severely affected by the economic sanctions imposed by the United States and Europe in response to the Russian invasion of Ukraine, for which it had to momentarily stop its production activities.
A wall street journal report It indicates that more than 20 percent of the parts that Avtovaz needs to build Lada vehicles are imported, the vast majority of which have been sold out in the last two weeks. The situation could worsen if Renault loses the ability to operate Avtovaz factories in the cities of Togliatti and Izhevsk.
A Reuters report indicates that Renault, which is the largest car manufacturer and seller in Russia, with about 30% of the market between locally manufactured Lada products and Renault products produced in a factory in Moscow, could lose its position in Russia. According to the report, the Putin government has threatened to nationalize any company whose capital is 25% or more in the hands of foreigners from hostile states, if they threaten to close their local operations.
Such a move could have devastating effects for Avtovaz. “It could take months or maybe years to resume production if Avtovaz loses support from Renault,” according to a former Avtovaz board member quoted by the Wall Street Journal.
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However, a statement from Avtovaz says that the parties involved “are working on some kind of solution for the interruption of production.” According to statements by Sergey Ilinskiy, spokesman for the Renault Group based in Russia to car and driver “The company is doing everything possible to return to a normal production schedule at its Togliatti and Izhevsk plants as soon as possible.” The company hopes that the current situation will not affect the launch of vehicles such as the facelifted Lada Vesta for 2022 and the next generation of the Lada Niva.
According to the Wall Street Journal, sales of Lada vehicles represent 21% of the Russian automotive market, which could be about to face a historic contraction now that, also as a consequence of the invasion of Ukraine and despite threats from the Putin government, Foreign manufacturers such as BMW, Ford, Hyundai, Toyota and Volkswagen have suspended local production or halted imports into Russia.