Russia sanctions hit: Lada producer sends employees on forced leave

Russia sanctions hit clean
Lada producer sends employees on forced leave

In 2022, the Russian state will take over Renault’s shares in the country’s largest car manufacturer, Avtovaz. Because the competition is retreating, the group can expand its market leadership – but the sanctions hit it hard. A planned forced vacation for the workforce is now being brought forward.

Due to acute supply problems, the Russian carmaker Avtovaz is sending its workforce collectively on vacation for three weeks from the end of May. “In the spring of 2023, a number of component suppliers informed Avtovaz about the end of deliveries,” the group said, according to the Interfax news agency. The company, which was taken back by the Russian state last year, complained that previous delivery agreements had been broken with the termination.

The auto industry is one of the sectors most affected by Western sanctions in the country following the start of the Russian war of aggression. Actually, the assembly lines at the largest Russian car manufacturer were not supposed to be shut down for three weeks until the end of July and the workforce sent on vacation. The compulsory leave is now being brought forward by two months and is scheduled to last from May 29th to June 19th. Otherwise, uninterrupted production would not be possible anyway, said Avtovaz.

Last year, the group had to shut down production for months due to problems with accessories. With virtually all Western automakers pulling out of Russia, Avtovaz has expanded its market leadership, but has not been able to benefit much from the competition’s withdrawal because of these difficulties. With an overall market slump of 59 percent in 2022, Lada sales also fell 46 percent. Avtovaz also struggled before the full-scale Russian invasion of Ukraine. A few years ago, thousands of employees were laid off at the Russian market leader in order to cut costs.

The French carmaker Renault sold its majority stake in Avtotaz to a Russian scientific institute in 2022 for one ruble. The assembly lines at the company’s own plant in Moscow had already been shut down beforehand. Russia was the Renault Group’s second largest market after Europe.

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