Russian automakers, which did not close their assembly lines even during the Cold War, are greatly affected by the Western sanctions that have been going on since last week. Russia’s largest manufacturer, Lada, cannot find the materials it needs to make cars. The future of Russian auto plants is controversial.
According to reports by automotive industry analysts in Russia, Western sanctions brought Lada factories to a standstill. As thousands of workers at Lada factories are put on leave, the assembly lines seem to be empty for a while.
Lada’s Russian automobile factories closed the assembly line
This pause in automobile factories shows how the Russian economy has begun to be affected by Western sanctions. For example, Russia’s exclusion from the Swift interbank payment system has led Russian companies to suspend their agreements with suppliers.
Lada’s parent company, AvtoVAZ, reported that more than 20 percent of auto parts, from connectors to electronic components, come from outside Russia. According to a former AvtoVAZ board member, if trade with Europe stops, AvtoVAZ will also come to a standstill.
Referring to the global chip shortage affecting automakers around the world, another AvtoVAZ member said that Lada plans to shut down its factories until at least March 11. The spokesperson also stated that workers who do not want to use their vacation days will receive a portion of their monthly income during their leave.
The stopping of the factory lines is also a big problem for Renault, the top board of AvtoVAZ. Lada sold nearly 350,000 vehicles last year (12 percent of Renault’s entire sales), making Russia its second largest market after France. Renault’s operations in Russia generated a net profit of approximately $181 million.
How do you think the Russian automobile factories will be affected by the Ukraine crisis? We welcome you to share your views with our other readers in the comments and SDN Forum section.
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