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AvtoVAZ to Cut 7,500 Jobs as Russian Car Market Stagnates

OAO AvtoVAZ, Russia’s biggest carmaker, will cut 7,500 jobs, about 11 percent of its workforce, in its fight to maintain profitability as economic stagnation hurts the domestic car market.

AvtoVAZ has developed “urgent measures” to adjust production, cut costs and tighten control over inventory and working capital, the company said in a statement, citing Bo Andersson, the former top purchasing manager at General Motors Co., who was appointed chief executive officer last year. Andersson is taking on the role at the manufacturer deepens ties with the Renault-Nissan alliance.

Russian new car sales fell 5.5 percent to 2.78 million last year after growth averaging 27 percent in the previous three years, the Moscow-based Association of European Businesses said Jan. 15 in a statement. This year sales may decline to about 2.73 million vehicles, the group forecasts.

AvtoVAZ deliveries shrank 15 percent to 456,309 Lada vehicles, showing the biggest drop in absolute terms, according to the data. Luxury car models including Land Rover, Bayerische Motoren Werke AG’s BMW and Daimler AG’s Mercedes-Benz all boosted sales by more than 10 percent, according to the AEB.

The biggest reductions will be made in manufacturing, with 5,000 positions cut through attrition, a hiring freeze and redistribution of the workforce between divisions, AvtoVAZ said. The remaining 2,500 will be managers, specialists and office workers, according to the statement.

“All of AvtoVAZ’s processes are being revised,” Andersson said in the statement.

Russia’s economy probably expanded 1.3 percent last year, short of the most recent forecast, Deputy Economy Minister Andrey Klepach said last week. In December, the ministry cut its growth estimates to 1.4 percent in 2013 and 2.5 percent in 2014.

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