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AvtoVAZ, Russia's largest carmaker, said it would cut over a quarter of its workforce to cope with plunging demand in a market that had been expected to become Europe's biggest before the financial crisis. AvtoVAZ, part-owned by French car maker Renault, said on Thursday it had agreed with trade union leaders to cut up to 27,600 jobs at the plant on the Volga river where the iconic Lada has been produced since Soviet times.
Sales of new cars in Russia fell 54 percent year on year in August. The sharp drop in demand that has accompanied salary and wage cuts has scuppered Russia's hopes of overtaking Germany as Europe's biggest car market this year. The Association of European Businesses expects 1.4 million cars to be sold in Russia this year, down from 3.2 million in 2008.
AvtoVAZ, also part-owned by state conglomerate Russian Technologies, has halved salaries and reduced the working week at the plant in Togliatti, a city 900 km (560 miles) south-east of Moscow built in the 1960s to serve the car plant.

Copyright Reuters, 2009

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