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AvtoVAZ

Avtovaz, Russia's largest car manufacturer, produces the iconic Soviet-era Russian brand "Lada" and engaged in joint production ventures with Renault and GM. AvtoVAZs Reasonably-Priced Cars are much sought after in Russia and in countries of the near abroad. By 2013 AvtoVAZ said they had returned to good profit and were going to dramatically expand their models range in the coming three years. They planned to turn out about 800,000 Lada, Renault and Nissan vehicles in 2013.

The Vaz-2101 Zhiguli, a small sedan, was introduced in 1970 and was Volzhsky Avtomobilny Zavod's (VAZ) very first product. Along with the Moskvitch-412, the Vaz-2101, nicknamed Kopeyka ["kopeck"], was probably the most common passenger car used in the Soviet Union. Using the original Kopeyka, VAZ later developed an entire series of classic sedan-class passenger vehicles. The Kopeyka was exported overseas, primarily to Soviet ally countries. To this day, many Vaz-2101 cars can be seen driving around the streets of Cuba. In 2000, the respected Russian automobile magazine Za Rulem carried out a survey among more than 80,000 drivers across Russia, seeking to find out "the best Russian car of the 20th Century." Needless to say, the Kopeyka easily won the contest.

AvtoVAZ will present new-generation Lada Kalina models at the 2013 Internatonal Motor Show which will take place in St.Petersburg from April 3rd through 7th. The new Lada Kalina Hatchback and Lada Kalina Station Wagon boast a more sophisticated design, new chassis settings and a wider range of options than in the previous models. The Lada manufacturers also planned to roll off brand new models and provide the Lada Sedan with a few extras.

Beginning with 2014, the AvtoVAZ motor manufacturers based in Togliatti on the River Volga will be assembling Nissans Datsun cars. In 2016, the annual output of these cars should reach 100,000, or about 80% of the Nissan vehicles on the Russian market.

The first Lada model to enter the UK market for 15 years, the best-selling off-road vehicle in early 90s in Brazil and the symbol of the Resistance movement in the Republic of Macedonia the Lada Niva is world-famous Russian auto brand with Soviet history. The Niva has a reputation for being resilient in the harshest conditions which is exactly what makes it one of the most in-demand models over the world. VAZ-2121, or the Lada Niva, which is Russian word for crop field, is made by the former Soviet manufacturer AvtoVAZ. It was also marketed as the Lada Sport in Iceland, Lada Taiga in Austria and Bognor Diva in Uruguay. Lada Niva was VAZ's first non-Fiat based model. Much of the mechanics were carried over from the Fiat 124-based Lada models, though the body, four-wheel drive system, and front suspension were designed by VAZ. Production began in 1977. During the 1980s local Lada importers in various markets made their own upgrades to help compete with more modern SUVs. In the UK the Cossack model featured large body decals, roof rails and running boards.

While the company's ownership structure is not fully transparent, Renault acquired 25% of the stock in 2008 and a small percentage of the stock is publicly traded. The largest block of shares was owned by Rostekhnologii and its affiliated companies, and Sergey Chemezov, the President of Rostekhnologii, is also Chairman of the Board of Avtovaz. Rostekhnologii is a state-owned conglomerate that also owns aviation assets, titanium production, and much of Russia's military-industrial complex.

In 2005 Chemezov took control of AvtoVAZ for virtually nothing. Having obtained the resignation of almost the entire top management, Rosoboronexport appointed its representatives at first to the board of directors of the plant and then to all key positions in the management. According to Sergey Chemezov, dismissing management could be compared to a full-scale field campaign, employing the capabilities of the Russian security services (Federal Security Service and Ministry of Internal Affairs), as well as the Attorney General's Office.

In order to convince the old team to leave, a team of investigators and prosecutors arrived in Togliatti after the resignation of Kadannikov. Soon the three chief accountants of AvtoVAZ faced charges of embezzlement and tax dodging. The charges were dropped a few weeks later. Restoring order took the new owner of AvtoVAZ replacing nearly all the police in Togliatti and at the plant. "We have serious doubts that any private strategic investor would have been able to do it", said Chemezov.

In December 2005 a half-hour meeting of shareholders to elect new management was held in headquarters of the company surrounded by the police cordon. There were no alternative candidates on the ballot.

Avtovaz employed 104,000 workers in 2009 at its production facilities in Tolyatti (population 705,000). The company's vehicle sales declined 6% in 2008 compared to 2007. (According to estimates from the Association of European Businesses, foreign car sales increased 26% in 2008 compared to 2007, while domestic car sales dropped 9%.) Avtovaz produced nearly 740,000 cars in 2008, but as it lost market share to foreign car producers, it entered 2009 with an inventory overhang of over 110,000 vehicles (equivalent to more than two months' production). Avtovaz planned to produce only 600,000 vehicles in 2009. Avtovaz laid off 400 of 1,200 workers producing the GM Niva (a sport utility vehicle) and temporarily reduced its other productions lines to two shifts of six hours each.

In early February 2009, Avtovaz temporarily idled all of its production lines because of payment disputes with its suppliers (since January 1, it had been paying 30% cash and 70% in promissory notes on the accounts payable to its suppliers). However, the payments problems with suppliers were reportedly resolved, and the company resumed production on February 9.

Rostekhnologii is one of only seven state-owned corporations that receive money directly from the federal budget, is only required to report financial results to the GOR once per year, and does not operate in a fully transparent manner. As such, it is entirely possible that Avtovaz could receive GOR money transfers via Rostekhnologii without any public disclosure of the support. In late 2008, Rostekhnologii received more than $5 billion in state support to weather the financial crisis, though, according to press reports, the GOR intended that much of the funds would be used to prop up the company's defense and aviation holdings, rather than Avtovaz.

Rostekhnologii President Sergey Chemezov was reportedly seeking an additional $7.22 billion in state support in the form of GOR capital contributions and state guarantees. If the GOR granted Chemezov's request, it was not clear how much of that funding will ultimately flow to Avtovaz. Avtovaz also announced that in March 2009 it would begin providing subsidized loans to consumers wishing to purchase the Lada and other Avtovaz models by using its own financial resources and those of two leading Russian banks, Sberbank and VTB. The company was also reportedly seeking buyers for its car dealership subsidiary, which accounted for roughly 25% of total sales, in order to raise about $150 million in cash.

In 2012 the Rostekhnologii State Corporation and the Renault-Nissan French-Japanese alliance signed an agreement on setting up a joint venture to run the AvtoVAZ Russian car-maker. The alliance will get the controlling stake of the car giant, while Rostekhnologii will be the blocking shareholder. The Rostekhnologii State Corporation and the Renault-Nissan French-Japanese alliance have signed an agreement on setting up a joint venture to run the AvtoVAZ Russian car-maker. The alliance will get the controlling stake of the car giant, while Rostekhnologii will be the blocking shareholder. The Renault-Nissan President Carlos Ghosn will head AvtoVAZ, while the Rostekhnologii Chief, Sergei Chemezov, will remain the AvtoVAZ Board Chairman, taking turns with Ghosn as Deputy Chairman of the Board. Under the contract, the French-Japanese alliance will invest 23 billion roubles in the joint venture.




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