The Russian government could allow French group Renault to buy control of AvtoVAZ as part of a broader plan to save the ailing car maker, a Russian government source told Reuters on Wednesday. "At the end of the day the government will search for a strategic investor - and it will likely be Renault," said the source, who asked not to be identified.
Renault currently has a 25 percent stake in AvtoVAZ, Russia's largest carmaker which has been hammered by tumbling car sales in the worst Russian recession since the mid 1990s. "They (Renault) are ready to increase their stake and are looking at the option of increasing to a controlling stake," the source said.
AvtoVAZ wants to cut a quarter of its workforce in Togliatti - an industrial city on the banks of the river Volga that only exists for the plant's workers - to cope with plummeting sales and heavy debts. The Russian government has been reluctant to allow the car maker to proceed with job cuts fearing they could lead to mass unrest that would hit support for the government of Prime Minister Vladimir Putin.
Putin said this week the government will help AvtoVAZ settle debts and could raise $2 billion on the market to support it. The government source told Reuters some 43 billion roubles ($1.47 billion) would come directly from the federal budget. AvtoVAZ has repeatedly warned of bankruptcy after experiencing a 44 percent fall in car sales since the beginning of the year while grappling with about 60 billion roubles ($2.05 billion) of debt.
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