BUSINESS

Russia Pressures Renault Over AvtoVAZ

By Paul Abelsky

Bloomberg

Denis Sinyakov / Reuters AvtoVAZ employees walk along an automobile assembly line of the factory on the Volga River, in Tolyatti.

MOSCOW — Russia’s government increased pressure on Renault, France’s second-biggest carmaker, to help AvtoVAZ restructure debt and stay in business.

Renault, which owns 25 percent of AvtoVAZ, needs to help Russia’s largest carmaker develop a broader range of cars to remain competitive, the Industry and Trade Ministry said in a statement. Plunging sales will push AvtoVAZ’s debt to creditors and component suppliers to about 86 billion rubles ($2.9 billion) in the next three months, the ministry said.

Prime Minister Vladimir Putin said on Oct. 2 that Renault would have to put more money into Tolyatti-based AvtoVAZ or provide more of its technology if the French carmaker wants to avoid having its stake diluted. Renault paid about $1 billion for the holding, which has lost more than half of its value since last year.

AvtoVAZ will outline an “anti-crisis” strategy Tuesday, a company official said Thursday in a phone interview, dismissing news reports that the carmaker faces bankruptcy. AvtoVAZ needs to cut about 50,000 jobs, almost half its workforce, to avoid insolvency, Kommersant reported Thursday, citing an internal Industry Ministry document.

Renault fell as much as 38 cents, or 1 percent, to 35.91 euros and was down 0.3 percent as of 12:05 p.m. in Paris trading. That pared the stock’s gain in 2009 to 95 percent, valuing the carmaker at 10.3 billion euros ($15.4 billion).

AvtoVAZ dropped as much as 4.6 percent to 15.06 rubles in Moscow. The shares have more than doubled this year, giving the company a market value of 21 billion rubles.

The Russian manufacturer of Lada sedans may need to seek a partner other than Renault because of the Boulogne-Billancourt-based partner’s “unwillingness to share technologies,” the Moscow-based newspaper cited the document as saying. The carmaker remains committed to its ties to Renault and Nissan Motor Co., the French company’s Japanese affiliate, AvtoVAZ said Thursday.

The Renault-Nissan alliance, headed by Carlos Ghosn, plans to produce vehicles based on the no-frills Logan sedan on a shared AvtoVAZ assembly line, the Russian carmaker’s President Igor Komarov said last Friday.

“We’re still working with all partners to find the best solution for AvtoVAZ, including the possibility of sharing our technologies,” Renault spokeswoman Caroline De Gezelle said by telephone Thursday.

Renault is “not aware of AvtoVAZ being on the verge of bankruptcy,” she added.

Industrywide sales of new cars and commercial vehicles in Russia fell 52 percent last month, according to the Association of European Businesses.

The Russian government has given AvtoVAZ 25 billion rubles in emergency loans, while the carmaker has slashed salaries and announced plans to eliminate at least 5,000 jobs. AvtoVAZ will owe 76.3 billion rubles to financial backers and 9.8 billion rubles to suppliers by the end of the year, the IndustryMinistry said.

Alyona Shipilina, a spokeswoman for the ministry, declined to comment on the Kommersant report.

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