AvtoVAZ to cut car output on low demand

Russia’s largest auto manufacturer AvtoVAZ will cut output during September-November by a total of 25,000 units, citing a weak domestic market, the company said on Saturday August 23.

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The measure is due to “lower car sales in the Russian market”, and improved inventory management, AvtoVAZ said. The carmaker stopped short of giving the actual planned output numbers for the period.

In July, AvtoVAZ made 59,200 new cars at its facility in Tolyatti in the east of the country, including 47,100 its own Lada brand cars, and 12,100 of Renault- and Nissan-branded cars.

AvtoVAZ which has a strategic alliance with Renault-Nissan, buys most of its steel from Magnitogorsk Iron & Steel Works, as well purchasing material from Novolipetsk Steel (NLMK), the company’s spokesman said on Monday August 25.

MMK and NLMK did not respond to the Steel First’s request for comment by the time of publication.

Sales of new cars and light commercial vehicles (LCVs) in Russia dropped by 10% year-on-year to 1,410,606 units in January-July, according to the Assn of European Businesses (AEB). The sales are falling in line with the slowing economy.

General Motors’ car plant in St Petersburg is stopping production for a total of one-and-a-half months between August 22 and October 27 due to the “continuing slowdown of Russia’s auto-market,” Russian business daily Kommersant reported on Friday.

Severstal supplies steel to the mill, as well as to the Russia-based facilities of Volkswagen, Renault-Nissan, Hyundai-Kia and PSA Peugeot Citroen.

The company’s spokeswoman said Severstal hasn’t experienced a fall in steel sales to the Russia-based international automakers, but stopped short of giving actual figures.

AEB said it expects new car and LCV sales in Russia to fall by 12% this year to 2.45 million units. In 2013, sales dropped by 5% to 2.78 million units.