MOSCOW: AvtoVAZ, Russia's largest car maker, said Wednesday it has stopped production at its main factory once again due to a renewed dispute with parts suppliers.
The main factory in Togliatti halted production indefinitely due to a lack of parts, AvtoVAZ spokeswoman Natalya Sidoruk told The Associated Press.
The dispute between AvtoVAZ, 25 percent owned by France's Renault SA, and its suppliers has been raging for months. AvtoVAZ is paying suppliers an estimated 70 to 80 percent in promissory notes, with the remainder in cash. Observers have said suppliers want to get paid in cash in full, as the credit crunch shows no signs of easing.
Production was halted Tuesday afternoon and resumed Wednesday morning, but stopped several hours afterwards.
"We are negotiating with the suppliers, and as soon as we reach an agreement we will resume production," Sidoruk said.The Togliatti plant was idle for several days in early February when the suppliers halted deliveries, urging AvtoVAZ to pay them in cash.
The car maker, whose models include the iconic Lada, is suffering from low sales as the financial crisis dents the country's wealth.
AvtoVAZ sold 29,000 cars in January this year, compared to a monthly average of 50,000 to 60,000 cars before the financial crisis.
The company is believed to be heavily in debt. It owed 18 billion rubles ($497 million) at the end of September, but AvtoVAZ president Boris Alyoshin insisted last month that the company was doing well despite problems with cash flow.
Until the production halt, AvtoVAZ operated with two shifts four days a week. Employees not involved in manufacturing have been put on leave at two-thirds pay.
Healthcare and Social Development Minister Tatyana Golikova announced Wednesday that 3,200 AvtoVAZ employees are expected to be laid off soon, Russian news agencies reported.
Some 12,500 are currently on forced unpaid leaves, she said at the upper house of the Russian parliament.
The Russian government rode to AvtoVAZ's rescue in December, sharply raising duties on imported cars to protect domestic carmakers.
Analysts sounded confident that the car maker would get a bailout from the government no matter what it does.
"The government and AvtoVAZ have special relations," said Mikhail Pak of the Moscow-based brokerage Metropol. "I have no doubt that AvtoVAZ will get some state financing — in the form of loans or subsidizing their borrowings."
The state corporation Russian Technologies owns a quarter of AvtoVAZ after selling a 25 percent stake to Renault last year. Investment bank Troika Dialog owns another 25 percent. The remaining quarter is floated on the market.
The number of households that own a car dropped 2 percent to 39 percent in 2008 compared to three years earlier, the VTsIOM polling agency said Wednesday.
Since 2006, the share of those who own a Russian car has declined from 75 to 63 percent, according to the poll.