Massive financial, trade, and transportation sanctions are forcing Russia to adapt to a new reality where most of its business operates under reduced load or doesn’t operate at all. Following the invasion of Ukraine, tens of companies from all around the world have abandoned their operations in the country, and the automotive sector has been affected seriously. Virtually all European automakers have frozen their operations in Russia and it seems that even Lada is facing difficulties carrying on.
A new report from The Wall Street Journal claims the AvtoVAZ-owned brand has halted production at its main plant in Togliatti due to the lack of supplies of different vehicle components. Renault holds a controlling 67.61-percent stake at AvtoVAZ and relies on supplies from its factories in Romania with over 20 percent of the parts for Lada coming from outside Russia, mostly connectors and other electronic components. Lada’s Izhevsk plant has also stopped producing cars.
For now, production has been halted for four days but this is probably just the beginning and more interruptions can be expected. The report from WSJ quotes a former AvtoVAZ board member, who said that "if trade stops, AvtoVAZ stops,” due to Lada’s heavy reliance on parts imported from other countries. There’s no official statement from the manufacturer on its press sites yet, though Russian media released the following statement said to be coming from the company:
“In connection with the ongoing crisis in the supply of electronic components and in order to prevent a significant decrease in the level of income of the company’s employees, the AvtoVAZ administration made the following decisions on the work schedule of factories in Togliatti and Izhevsk: March 5, 2022, is declared a downtime day with pay. The period from March 9 to March 11 is declared idle days with payment in the amount of two-thirds of the average monthly earnings.”
According to data from MarkLines, Lada was the best-selling car brand in Russia in February this year with a total of 22,378 deliveries, down 20.8 percent compared to the same month last year. Local media reports that production of the Granta family, Lada’s best-selling model, has been affected, which probably means the numbers for March will be significantly lower.