Russian automaker AvtoVAZ, producer of Lada, stated that bankruptcy is a possibility for the company if there is no immediate restructuring solution with the banks. AvtoVAZ has huge accumulated debts and its needs support of the banks to pay off its debts, said Oleg Lobanov, the firm’s executive vice president for finance. “Our production plan does not allow us to generate sufficient funds to service our existing debt and pay interest,” he said. “If the other options don't succeed, then we have no other choice.”
Renault has currently 25 percent stake in AvtoVAZ. Renault CEO Carlos Ghosn has said that Renault is ready to help AvtoVAZ to overcome its debts. “We are ready to support Avtovaz,” he said. We are supporting them with management and with technology. I am confident that AvtoVAZ will be able to overcome its troubles in the short term and the medium term.” Renault is also ready to build small car platform with AvtoVAZ to become profitable again.
In June, AVtoVAZ had debts to the tune of £2.2billion when recession had seriously hit the Russian economy and there was a considerable fall in the demand of new cars. AvtoVAZ has already cut 27,600 jobs to cut costs