“Kommersant-Dengi”: “Saving AvtoVAZ”
A special "operation" aimed at saving Russia's largest automaker, AvtoVAZ, was conducted over the whole of last year. Its first stage was launched in January, when the government sharply raised import duties on foreign-made cars. This measure was taken to help AvtoVAZ, whose assembly lines had been standing still since December 2008. The plant immediately reacted by raising car prices.
In spring, the United Russia party came to its aid by inducing Russians to buy Zhiguli cars. The government, in turn, cancelled railway rates for transporting Zhiguli cars to the Far East. Then Prime Minister Vladimir Putin sprang into action: In April, he visited the plant and announced there that he had bought a Niva. He also allocated 25 billion roubles of budget funds for the company needs.
Simultaneously, the Ministry of Industry and Trade compiled a list of vehicles to be sold on credit at a budget-subsidised rate; the list included AvtoVAZ's entire model lineup.
In early summer, it was clear that French top-managers were leaving the plant (Renault holds a 25% plus one share stake in AvtoVAZ). Igor Komarov, former deputy director general of Russian Technologies State Corporation, became No. 2 at the company after its president, Boris Alyoshin.
By early August, the plant's managers declared the need to lay off at least 25% of the plant's personnel (about 28,000 people), and in mid-August it was revealed that the 25 billion roubles of state aid had already been spent to pay debts, wages, and taxes. Boris Alyoshin left the company to take a job at the Central Aerohydrodynamics Institute, and Igor Komarov took up his post.
On October 19, the AvtoVAZ management admitted the possibility of bankruptcy for the first time in the plant's history. It turned out that the plant's debt burden—amounting to 62 billion roubles—would grow to 75.2 billion by the yearend. The plant cannot service its debts because sales do not cover its losses.
AvtoVAZ asked for more state aid – to the amount of 70 billion roubles this time, which was record high for a Russian enterprise. The request was met: In late November, AvtoVAZ and its three main shareholders – Renault, Russian Technologies and Troika Dialog (each holding a 25% plus one share stake in AvtoVAZ) – agreed on joint support for the plant. The Russian government will give 50 billion roubles and Renault €300 million (14.8 billion roubles), of which only €60 million will come in cash, with the rest covered by technologies and equipment supplies.
However, Mr. Putin promised that the French concern's share in AvtoVAZ will not decrease and may even grow. In mid-December, the Prime Minister signed the order to allocate the first portion of the budget funds (12 billion roubles) to the plant for settlements with suppliers. This money was redistributed from allocations reserved in the 2009 budget to boost capitalisation of the banking system.
