Russia’s AvtoVAZ, the maker of Lada cars, is on the brink of bankruptcy, Sergei Stepashin, the head of State Audit Chamber told Reuters on Wednesday.
Russia is currently deciding how best to restructure AvtoVAZ, pushed close to collapse by a major slump in Russian car sales caused by the recession.
“The company is on the verge of bankruptcy, despite the allocation of huge funds,” said Stepashin, whose chamber reviews all companies which are recipients of state aid.
“Now the issue is not the review…Its fate needs to be decided,” he said on the sidelines of the opening of a new biscuit factory by food giant Kraft.
Stepashin said the outcome of the review could be delivered in December, adding that the main issue was how to protect jobs.
AvtoVAZ, a quarter owned by French car-maker Renault since it took a stake in 2008, has said it would have to cut 27,600 employees — about a quarter of its workforce.
A Renault spokeswoman said the company was not aware of a bankruptcy situation at Avtovaz. She added that Renault was working with Russian authorities and Avtovaz shareholders on a plan to safeguard the future of the Russian manufacturer.
AvtoVAZ said on Monday it had run up a loss of 19.4 billion roubles ($657.6 million) in the first half of the year — 10 times the figure of the same period in 2008.
It said in a presentation to government earlier this month that it needed 70 billion roubles in state aid, while Prime Minister Vladimir Putin has publicly urged Renault to help save the company.
AvtoVAZ could not immediately be reached for comment.