As economic stagnation hurts the domestic car market, the new CEO, Bo Andersson, said Russia’s biggest carmaker, AvtoVAZ, will cut 7,500 jobs, about 11 % of its workforce, in its fight to maintain profitability.

Russian new car sales fell 5.5 % to 2.78 million last year after growth averaging 27 % 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 also forecasts.

Andersson said in a statement that AvtoVAZ has developed “urgent measures” to adjust production, cut costs and tighten control over inventory and working capital. 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.

Sales of AvtoVAZ’s Lada brand shrank 15 % to 456,309 vehicles in 2013. The company in October also reported that it had swung to a first-half net loss. The automaker is due to come under the control of Renault-Nissan this year, with its new owners planning to win market share by taking the boxy Lada models upmarket.

Andersson was appointed AvtoVAZ CEO on Dec 31. Before joining the automaker, Andersson was credited with the turnaround at Russian bus and truckmaker GAZ, boosting profits with a cost-cutting drive.

Via Automotive News Europe


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