AvtoVAZ is currently grappling with significant challenges, as articulated by the company’s president, Maxim Sokolov. Sales have sharply declined, and inventory levels are alarmingly high, exacerbated by factors such as decreased demand and difficulties with international logistics.
Sokolov recently reported to Kommersant about the situation, noting, “Несмотря на снижение поставок, темпов реализации всё равно не хватает, чтобы переломить тренд по увеличению запасов. В основном, конечно, запасов китайских брендов. Но тем не менее и запасы АвтоВАЗа тоже подошли вплотную к отметке 100 тысяч,” indicating the company’s unsold inventory has reached about 100,000 vehicles, significantly above the normal standard of 60,000. This increase in stock exemplifies the growing strain on AvtoVAZ as the automotive crisis intensifies.
According to the latest insights, the overall number of unsold cars across the Russian market ranges from 360,000 to 500,000. This glut could hinder brands’ abilities to sell through their inventory, potentially prolonging the current troubles through the summer months.
The drop in sales, according to Sokolov, can be attributed not just to market conditions but also to supply shortages due to sanctions affecting key components. He emphasized the need for active measures across the automotive sector, stating, “Призвал всех участников автомобильного рынка к активным действиям, чтобы избежать дальнейшего падения объемов продаж.” This call to action is regarded as urgent, with Sokolov urging modernization of production processes and securing new suppliers to mitigate reliance on foreign parts.
Despite these bumps, AvtoVAZ remains optimistic about its plans for the year, targeting production of 500,000 vehicles. Nevertheless, the reality is harsh, and maintaining this production level might be tough amid rising inventory.
Compounding AvtoVAZ's troubles is the question of Renault, the former stakeholder which exited the Russian market back in 2022. Sokolov remarked, “АвтоВАЗ не получал официальных запросов от Renault,” illustrating the current disconnect between the two companies. Renault’s previous investments, averaging about 20-22 billion rubles each year, will be heavily weighed against what it would cost to reacquire its stake now, especially since AvtoVAZ plans to double its investments to 45 billion rubles by 2025.
Although Renault has expressed some interest, its priority does not seem to lie with regaining majority control of AvtoVAZ at this moment. Instead, discussions would require state-level involvement, so the possibility of Renault’s return remains uncertain.
Adding to the hopes for AvtoVAZ, the introduction of the new model, Lada Iskra SW Cross, is set to commence by early 2025. This model aims to revitalize the company's image and attract new customers, factors deemed necessary to stimulate sales recovery.
While the road to recovery appears steep for AvtoVAZ, the combination of strategic investments, new model launches, and calls for industry collaboration may provide the necessary momentum to navigate through these turbulent times. With uncertainties looming, only time will tell if these steps will yield the desired outcomes for both AvtoVAZ and the broader Russian automotive market.