Lada-maker AvtoVAZ to axe jobs as Russian car market slows

MOSCOW Thu Jan 23, 2014 10:43am EST

MOSCOW Jan 23 (Reuters) - Russia's largest carmaker AvtoVAZ plans to axe 2,500 jobs and lose about the same again through attrition this year to help it back to profit in a contracting domestic market, its new chief executive said on Thursday.

The 7.5 percent reduction in the AvtoVAZ workforce comes in response to the Lada manufacturer's worsening results and a negative forecast for the Russian market in 2014.

"AvtoVAZ has developed urgent measures to improve the company's health," CEO Bo Andersson said in a statement. "The primary goal is to have sustainable profit notwithstanding the current situation in the Russian market."

Russian car sales fell by 5 percent in 2013, according to auto industry lobby group ABE, which is forecasting another weak year because of the faltering economy.

Before joining AvtoVAZ this year, Swede Andersson was credited with the turnaround at Russian bus and truckmaker Gaz, boosting profits with a cost-cutting drive. Before that he held a high-level post with General Motors.

AvtoVAZ, which in October reported that it had swung to a first-half net loss, is due to come under the control of Franco-Japanese alliance Renault-Nissan this year, with its new masters planning to win market share by taking the boxy Lada upmarket.

Figures from the AEB show that AvtoVAZ had a 16.4 percent share of the Russian market in 2013.

To support the struggling industry, the government recently announced plans for subsidies for Russian automakers of up to 271 billion roubles ($8 billion) in the three years to 2016. (Reporting by Gleb Stolyarov and Megan Davies; Editing by Maria Kiselyova and David Goodman)

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