The Izhevsk Automobile Plant is one of the city's largest enterprises with a design capacity of 220,000 cars a year. It was built in 1966 when the Moscow car plant AZLK moved the production of the Moskvich-408 car to Izhevsk.
In 2005, Izhavto launched the licensed assembly of KIA Spectra cars. And the plant has installed welding, painting and assembly equipment from leading world producers (Durr, Wooshin, DongHee, ROFA, etc). Environmentally hazardous electroplating technology has been abandoned. An air purification system and a sewage system has been purchased from Durr (South Korea).
However, the plant had to stop assembly in May 2009 because of the growing cost of parts for KIA cars and an overall drop in demand for cars in 2008-2009. The management of IzhAvto decided to begin bankruptcy procedures to rehabilitate the enterprise.
The plant was put under observation for a term of six months beginning on September 4, 2009.
On March 4, 2010 the arbitration court of the Republic of Udmurtia introduced the external management of Izhavto for a term of 18 months.
On April 13, 2010 a memorandum of understanding was signed between the government of the Republic of Udmurtia and Hyundai Motors Company. The South Korean company plans to produce 500,000 cars a year in Russia.
An external administration plan approved on May 4, 2010 envisages the resumption of production, the lease of part of its property, cost-cutting measures, the collection of accounts receivable, the sale of parts of non-core property.
The production of Hyundai cars at the plant is being organized by its main creditor, Sberbank, jointly with the external manager of IzhAvto.
On August 6, 2010 a business plan for IzhAvto continuing until 2014 was approved which would see the launching of production of the entire range of classic VAZ cars and the resumption of the commercial assembly of Hyundai and KIA cars. The business plan will be financed by Sberbank of Russia.
Under the plan, the entire range of classic AvtoVAZ models (VAZ-2105 and VAZ-2107) is to be transferred to IzhAvto in the fourth quarter of 2010. . Production of VAZ-2104 and Izh-27175 was resumed in August. The plant expects to assemble 9,000-10,000 cars before the year is out.
Assembly of the KIA Spectra is due to start in October to November and of KIA Sorento in mid-2011.
As of August 11, 2010, the enterprise had 2,590 employees on its payroll.