Translated material
Spring start
AvtoVAZ hopes for a bright future after the approval of a new business plan
The board of directors of AvtoVAZ will consider the plant’s development program until 2020, company president Igor Komarov told reporters in Moscow yesterday. According to him, the document was discussed by the board on Friday, and on March 10 it should be approved by the company's main shareholders - Troika Dialog, Russian Technologies and Renault. The business plan, which the management of the automobile plant prepared with the participation of shareholders and the Boston Consulting Group, is very meaningful and objective, “it is difficult to overestimate its importance for AvtoVAZ,” Mr. Komarov noted.The basic parameters of the document are known. As in the memorandum of understanding signed in France, we are talking about the production of more than 1 million cars by 2020, and the share of the Lada brand among all AvtoVAZ models should be 70%. AvtoVAZ's investments in the technical level of production should double by 2020. The head of the auto giant also added that this year the company will be able to achieve positive cash flow by producing at least 450 thousand cars, including export supplies.
At the beginning of February, Mr. Komarov already announced the company's plans to bring operating profit to zero by the end of 2010, and EBITDA by 4.5 billion rubles. At the same time, he said that AvtoVAZ’s net loss last year increased significantly compared to the data for 2008, exceeding the level of three quarters of 2009, but did not name the final figures. As previously reported, in 2009, compared to 2008, AvtoVAZ sales decreased by 44%, to 349.49 thousand cars. At the same time, the car plant produced 294.7 thousand Lada cars last year, including 34.7 thousand for export. The company's car production plan for this year is about 446 thousand units and about 51 thousand assembly kits.
The head of the AvtoVAZ trade union organization, Nikolai Karagin, noted yesterday that the company hopes to reach a production volume of 1.2 million cars by 2014. “It all depends on how quickly the Russian economy overcomes the crisis and how quickly the automobile market returns to pre-crisis volume. According to analysts, this should happen somewhere by the end of 2014 - beginning of 2015,” he told Interfax.
Mr. Karagin noted that in 2010-2011 the enterprise should complete the modernization of the first conveyor line, where the assembly of new models will begin. For now, this line of the plant’s main conveyor belt is closed for modernization for joint projects of AvtoVAZ and the Renault-Nissan alliance. “In order to fill this line with people, we will need approximately 6 thousand employees. First of all, we will invite those who moved to our subsidiaries – AvtoVAZ Perspective and Reforming Center,” said the head of the trade union. According to him, about 7 thousand plant employees transferred to subsidiaries. “AvtoVAZ’s staff at the moment is approximately 74 thousand people. We need to transfer another 2.5-3 thousand workers to subsidiaries. Then we will reach the standard number,” said Mr. Karagin.
President of Renault (controls 25% plus one share of AvtoVAZ) Carlos Ghosn told reporters yesterday that the management of Renault-Nissan fully supports the actions of the current head of the plant, Igor Komarov, believing that he will help AvtoVAZ carry out a complete restructuring and become an effective company on the Russian market.
According to Mr. Ghosn, the Russian auto industry will rise this year: “The bottom has already been reached, the market will begin to recover in 2010.” In the medium and long term, he believes, the Russian automobile market will develop rapidly, while the European one will shrink by 10%.
Earlier, Minister of Industry and Trade Viktor Khristenko noted that the Russian car market will begin to recover in the second half of 2010. And ASM-Holding, which monitors the Russian automobile industry, in January predicted an increase in the production of passenger cars in the country in 2010 compared to 2009 by 34%, to 800 thousand units, and an increase in sales by 6.8%. , up to 1.5 million cars.
Renault launched yesterday the second stage of production at the Moscow Avtoframos, doubling the plant's capacity to 160 thousand cars per year, RIA NOVOSTI and INTERFAX report. Renault President Carlos Ghosn said that the concern intends to become a leader in the Russian market. According to the Automobile Manufacturers Committee of the Association of European Businesses, Renault is the fifth company in Russia in terms of the number of cars sold (ahead of Lada, Hyundai, Kia and Chevrolet). Investments in expanding the capacity of Avtoframos amounted to $150 million. Initially, $250 million was invested in the construction of the Renault plant in Moscow. In addition, on March 1, Renault began selling the Sandero model in Russia, and by the end of 2011 it is planned to launch production of the Duster SUV. Renault Vice President Christian Esteve, in turn, noted that Avtoframos intends in two to three years to increase the localization of production to 75% from the current 44. Renault's share in the capital of Avtoframos is 94.1%, the Moscow government owns 5.9 %. Since 2005, the plant has been assembling Renault Logan.