Russian car manufacturer AvtoVAZ to cut production due to rouble collapse and falling sales

Russian automobile manufacturer AvtoVAZ may cut car production in 2025 due to a sharp drop in sales and the rouble's devaluation.

Source: the company's president Maksim Sokolov; The Moscow Times reports

Details: Sokolov said the company is preparing to revise its production plan, which envisages the production of 500,000 cars at the beginning of next year.

Sokolov stated that the figure of 500,000 cars was the budget and production plan approved by the board of directors, but it had been based on the situation as of late October and early November. He added that the situation was changing dynamically and worsening.

AvtoVAZ sold about 39,500 passenger cars and light commercial vehicles in November, down 7.7% from October.

The monthly decline was recorded for all major Lada models except for Lada Largus. Thus, sales of the flagship Lada Granta in November fell by 25.9% compared to October (to 14,741 units), Lada Vesta by 10.4% (to 8,078 vehicles), Lada Niva Legend by 17.8% (to 4,137), and Lada Niva Travel by 20.7% (to 3,815).

Sokolov added that car sales were down in all segments and the company was preparing for a challenging 2025.

He said that AvtoVAZ is facing a "perfect storm": the company is being hit by the devaluation of the rouble, which occurred in late November when the dollar exchange rate approached RUB 115 on the Forex market, unavailable car loans due to the high key rate of the Russian Central Bank (21%), and tighter lending conditions.

Sokolov assured that the company has no plans to raise prices for the Lada models.

The official also said that it was quite obvious the changing rouble exchange rate would lead to a rise in the cost of purchasing imported components. He explained that it was a common thing – not so much among first-tier suppliers but among suppliers of materials, subcomponents, and raw materials. He added that it would inevitably affect the growth of production costs, which would at some point exceed the pricing limit.

Sokolov estimated the company's debt to be more than US$714 mln in September. He said the concern needs to find almost US$143 mln to service its loans annually. However, the government has already helped AvtoVAZ by postponing the payment of the scrappage tax until the end of the year, protecting the plant from import dumping, and providing soft loans, grants, and subsidies.

Background: As reported earlier, sales of new passenger cars and light commercial vehicles in Russia in 2025 may decline by 21-30% to 1.3-1.4 million pieces due to the high key policy rate.

Support UP or become our patron!