Bloomberg News

GM-AvtoVAZ Venture to Suspend Production as Deliveries Slide

July 31, 2009

General Motors Co. (GM:US) and OAO AvtoVAZ (AVAZ) plan to suspend production at a jointly owned car plant in August in response to the country’s shrinking auto market.

The GM-AvtoVAZ factory that makes Chevrolet Niva sport- utility vehicles will halt assembly lines on Aug. 3, coinciding with a month-long production shutdown at AvtoVAZ, the venture said today in a statement on its Web site.

GM-AvtoVAZ’s workforce of about 1,410 employees will receive 75 percent of their pay, which averages 13,000 rubles ($415) a month, Sergey Pavluchkov, head of the plant’s labor union, said in a phone interview. Both AvtoVAZ and the partnership with Detroit-based GM have their headquarters in the southeastern Russian town of Togliatti.

Russian sales of cars and light commercial vehicles dropped 49 percent to 763,962 in the first half of 2009 as rising unemployment, a devalued ruble and inflation reduced disposable income, according to the Moscow-based Association of European Businesses. Deliveries of AvtoVAZ’s Lada cars fell 44 percent, while Chevrolet Niva sales slumped 53 percent.

AvtoVAZ won’t build any Ladas in August, the company said on July 22. The suspension is part of an effort to cut AvtoVAZ’s 85,000-vehicle inventory in half.

To contact the reporter on this story: Anastasia Ustinova in Moscow austinova@bloomberg.net

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net


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