Page last updated at 09:18 GMT, Thursday, 24 September 2009 10:18 UK

Lada carmaker to cut 27,600 jobs

Lada cars
Lada may be a well-known brand, but sales have dropped 40% this year

Russia's largest carmaker, Avtovaz, is to cut up to 27,600 jobs as it tries to cope with the global slump in demand.

The job cuts are more than a quarter of the 102,000-strong workforce at Avtovaz, which makes Lada cars.

Reports had suggested that 36,000 job losses were considered, but the company said that it managed to "significantly lower the initial figure".

Russia had the fastest growing car market in Europe until the financial crisis hit demand.


"Today, 102,000 people work at Avtovaz," the carmaker said.

"Such a number cannot guarantee effective and profitable production, therefore we have agreed to reduce the personnel by 27,600 people."

This includes 5,000 job cuts in "white collar" jobs announced last week, it said.

Of the workers being eliminated, Avtovaz said 13,000 employees would retire with pensions while another 5,500 would be forced to take early retirement.

The remaining 9,100 employees would leave the firm, but Avtovaz said 6,000 of those would have the option to work at the carmaker again in 2012.

Sales have dropped 40% this year as consumers, hard hit by the financial crisis, have shunned the carmaker.

Production freezes

Avtovaz, which is 25%-owned by French automaker Renault, had imposed month-long production freezes while it tried to reduce levels of its unsold stock.

No cars were built in August and the plant will work two weeks in four from September to February, which meant that the workers will have to survive for six months on half pay of $300 (£176) a month.

The decision led to large worker protests.

The carmaker was set up with Italy's Fiat during the Soviet years.

It is a key employer in the southern city of Togliatti based by the Volga River, which has a population of 700,000.

In April, the company was on the verge of bankruptcy.

It was only after Prime Minister Vladimir Putin stepped in with a 20bn rouble (£400m; $600m) rescue package that the company survived.

Yet the package did not cover even half of the 44bn roubles that Avtovaz owed to its creditors.

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