AvtoVAZ

AvtoVAZ

Type	Public joint stock company
Traded as	MCX: AVAZ
Industry	Automotive
Founded	1966; 52 years ago (1966)
Headquarters	Tolyatti, Samara Oblast, Russia
Key people	Nicolas Maure (President)[1] Sergey Skvortsov (Chairman)[2][3]
Products	Automobiles
Production output	About 408,000 vehicles (2016)[4][note 1]
Revenue	₽225.65 billion (2017)[5]
Operating income	₽-0.64 billion (2017)[5]
Net income	₽-9.66 billion (2017)[5]
Total assets	₽114.39 billion (2017)[5]
Total equity	₽-67.24 billion (2017)[5]
Owner	Alliance Rostec Auto B.V. (64,6%)[6]
Parent	Groupe Renault
Website	Official website

AvtoVAZ (Russian: АвтоВАЗ), formerly known as VAZ (Volzhsky Avtomobilny Zavod) (ВАЗ, Во́лжский автомоби́льный заво́д, or Volga Automobile Plant),^[7] is a Russian automobile manufacturer. The company is best known for its flagship series of Lada vehicles; in the Soviet Union, its products used various names, including Zhiguli, Oka, and Sputnik which were phased out in the 1990s and replaced by Lada for the Russian market. French Groupe Renault has owned a majority stake in the Alliance Rostec Auto, which controls AvtoVAZ, since the end of 2016.^{[8][9][10][11]}

AvtoVAZ produces over 400,000 cars a year,^[12] under its Lada brand as well as the cars of Renault-Nissan alliance brands: Renault, Nissan and Datsun, the VAZ factory is the largest car manufacturer in Russia^[13] and one of the largest in the world, with over 140 kilometres (90 mi) of production lines.^{[citation needed]}

History[edit]

Establishment[edit]

The company was established in the late 1960s in cooperation with Fiat, with Viktor Polyakov (later Minister of Automobile Industry) as director, and Vladimir Solovyov as chief designer,^[14] and intended to produce popular economy cars that would meet the growing demand for personal transport.^[15] It was set up as a collaboration between Italy and the Soviet Union and built on the banks of the Volga River in 1966. A new town, Tolyatti, named after the Italian Communist Party leader Palmiro Togliatti, was built around the factory.^[15] The cost of the VAZ plant was estimated at $800 million in 1970^[16] (equivalent to $3.9 billion in 2016).^[17]

The car brand to be produced ("Zhiguli") was envisaged as a "people's car" like the Citroën 2CV or the VW Type 1. Production was intended to be 220,000 cars a year, beginning in 1971^[18] (other sources listed 300,000 in 1971^[16]); car production actually began before the plant was finished in 1970.^[18] The VAZ trademark, at first, was a silver Volga boat on a red pentagonal background, with "Togliatti" superposed in Cyrillic (Тольятти); the first badges, manufactured in Turin, mistakenly had the Cyrillic "Я" rendered "R" instead (Тольrтти), making them collector's items.^[19]

Unlike most Soviet enterprises, the company was not vertically integrated, rather depending for components on a variety of suppliers over which it exerted little control.^[20]

1970s[edit]

The first VAZ-2101 was produced on 22 April 1970, the 100th anniversary of Lenin's birth.^[21] About 22,000 VAZ-2101s were built in 1970, with capacity at the end of 1973 reaching 660,000 a year; 21 December, the one millionth 2101 was built.^[18] A third production line was added in October 1974, boosting output to 2,230 cars a day,^[18] the same year, total VAZ production reached 1.5 million.^[18]

The VAZ plant was described as 'ultra-modern' by the Chicago Tribune in a 1973 article.^[22] Production reached 750,000 cars a year in 1975, making the Tolyatti plant the third most productive in the world.^[23] Between 1977 and 1981, AvtoVAZ acquired 30 welding robots from Japanese firms.^[24]

The original, Fiat-based models included the VAZ-2101 sedan and the VAZ-2102 station wagon. 1972 saw the introduction of a deluxe version of the sedan, VAZ-2103, which was based on the Fiat 124 Special and featured a new 1.5 L engine and twin headlights. In 1974, the original VAZ-2101 was updated with new engines and interiors, whereas the VAZ-2102 underwent the same improvements in 1976, the body style with two round headlights was manufactured until 1988.

The VAZ-2106, introduced in December 1975 as an updated version of the VAZ-2103, was based on the 1972 Fiat 124 Special T, featuring different interiors and new 1.6 L engine. The 2106 was one of the most popular rear-wheel drive AvtoVAZ models in the past; its production ended in 2001 from Tolyatti, but continued at Izhavto (Izhevsk), ending there in December 2005.

In 1974, VAZ was given permission to begin producing Wankel engines under licence from NSU.^[25] Work began in 1976, with a single-rotor Lada appearing in 1978; the first 250 of these went on sale in the summer of 1980.^[25]

After having built a number of prototypes and experimental vehicles, AvtoVAZ designers launched the first car entirely of their own design, the VAZ-2121 Niva, in 1977, this highly popular and innovative^[26] SUV was made with off-road use in mind, featuring a gearbox with a central differential lock lever as well as a low- and high-range selector lever.

The VAZ-2105, based on the Fiat 124 mechanicals but modernised and restyled, was introduced in 1979 and marketed outside the Soviet Union under the Riva or Laika trade names, depending on the country. Square headlights and new body panels distinguish this car from the earlier models, the 2105 was third best selling automobile platform after the Volkswagen Beetle and the Ford Model T,^[27][28] and one of the longest production run platforms alongside the Volkswagen Beetle, the Hindustan Ambassador and the Volkswagen Type 2.^[29]

1980s[edit]

In May 1980, a series of mass strikes at the Togliatti plant involving hundreds of thousands of workers were reported by the western press;^[30] in 1982 the VAZ-2107, a deluxe version of the 2105, was introduced; it featured a better engine, refined interiors and a chrome radiator grille. In 1984, the VAZ-2104 station wagon completed the line-up.

Based on the success of the Niva, the design department prepared a new family of front-wheel drive models by 1984, which was of a completely domestic design. Production started with the VAZ-2108 Sputnik three-door hatchback, the series was commercially known as Samara, it was the first front-wheel drive serial car built in the Soviet Union after the LuAZ- 969V.^[31] The Samara engine was mostly designed and produced in-house, had a new single overhead camshaft (SOHC) design and was driven by a more modern rubber belt, the five-door VAZ-2109 hatchback followed in 1987, and the four-door 1.5 L sedan, the VAZ-21099, was introduced in 1990. The same year, the front sides and radiator grille were restyled on the whole Samara range.

A white 2108 would become the nine millionth Lada built, on 24 May 1985, with the ten millionth, on 9 October 1986, also a 2108,^[32] the twelve millionth, a right-hand drive 2109, was produced 6 July 1989.^[33]

The VAZ-1111 Oka micro-car was introduced in 1988, and in 1991 the production was transferred to the KamAZ and SeAZ factories.

By the late 1980s AvtoVAZ was suffering from the deterioration of its capital goods such as tools and machinery, resulting from insufficient levels of investment over a long period.^[23] Unproductive and antiquated management techniques also contributed to the decline, as did the absence of market competition.^[23]

The first privately owned AvtoVAZ dealership was established by Boris Berezovsky in 1989.^[34] Dealerships quickly turned into criminal rackets that at times simply stole cars from the factory.^[35]

Post-privatization[edit]

In June 1991 Bear Stearns was hired by the Soviet government to conduct an appraisal of AvtoVAZ and negotiate a venture with a Western partner, in preparation for the privatization of the company.^[36] An independent trade union was started during the same year, as workers deemed the traditional trade union to be too close to the interests of management.^[37]

In January 1993 AvtoVaz was re-established as a joint-stock company under Russian law,^[38] the company came to be controlled by the management, including Vladimir Kadannikov, head of AvtoVAZ.^[23] It was listed on the Moscow Stock Exchange,^[39] as with many other privatized post-Soviet companies the financial situation at AvtoVAZ was dire, with workers being unpaid for months at a time.^[40]

In 1994 Boris Berezovsky’s dealership company, called Logovaz, accounted for nearly 10% of the domestic sales of AvtoVAZ,^[41] despite the state of the Russian economy at the time demand for AvtoVAZ cars remained buoyant, but widespread corruption in the distribution network led the company to accumulate massive debts.^[41]

The 110-series sedan was introduced in 1995, two years late on its original 1993 deadline.^[37] Development costs for the car were estimated at $2 billion,^[42] the 2111 station wagon followed in 1998 and the 2112 hatchback completed the range in 2001. A five-door version of the Niva, the VAZ-2131, was introduced in 1995.

By 1995 car sales, distribution and spare parts at AvtoVAZ were all controlled by criminal organizations,^[40] this situation was made possible by the close relationship that existed between the criminals and part of the management.^[40] Additionally, gangsters were used to control the workers and break strikes.^[40]

By late 1996 AvtoVAZ had become the country's largest tax debtor, owing $2.4 billion in unpaid taxes.^[43] In 1997, the Ministry of Internal Affairs launched Operation Cyclone,^[41] an investigation which ultimately uncovered evidence that gangsters connected to AvtoVAZ had carried out at least 65 murders of company managers, dealers and business rivals.^[41]

The 1998 Russian financial crisis improved the company's market position, by improving the effectiveness of export sales and making imported cars too expensive for most Russians,^[39] the VAZ-2120 Nadezhda, a minivan based on the Lada Niva, was introduced in 1998. In the second half of the 1990s some efforts were made to improve the quality of production, but in 1999 there were still nearly 50,000 cases of cars being assembled with missing parts.^[44]

In 2001 GM-AvtoVAZ, a joint-venture with General Motors, was established.^[45] Increased competition from foreign car manufacturers saw the company's share of the Russian market fall to 49% in 2002, compared to 56% four years earlier;^[44] in 2003, VAZ presented the concept car Lada Revolution, an open single seater sports car powered by a 1.6 L engine producing 215 hp (160 kW). Production of the Wankel engine used on some Lada models (mostly the police version) stopped in 2004.^[46]

2005 saw the introduction of the new Kalina B-segment lineup to the market. AvtoVAZ has built a new modern plant for this model and is hoping to sell some 200,000 cars annually, the Kalina had been originally designed in the early 1990s, and its launch was repeatedly delayed, exemplifying the company's difficulty in bringing products to market in time.^[44]

In October 2005 the control of the company, which had until then been exercised by subsidiaries of AvtoVAZ connected to Kadannikov, was transferred to Rosoboronexport.^[44][47] March 2007 saw the start of production of Lada Priora, a restyled and modernised 110-series model.^[48]

Involvement of Renault-Nissan[edit]

In March 2008, Renault purchased a 25% stake in AvtoVAZ in a US$1 billion deal, with Rostec retaining the remaining 75%.^[49] The deal was agreed at a time when the Russian car market was booming.^[50]

The onset of the Great Recession caused considerable problems to the company.^[51] By April 2009 AvtoVAZ was on the verge of bankruptcy, which was only avoided because of $600 million bailout from the Russian government.^[52]

As an anti-crisis measure, the Russian government introduced a car scrappage scheme in March 2010.^[53] Avtovaz sales doubled in the second quarter of 2010 as a result, and the company returned to profit.^[54][55] By the end of 2010, automotive production in Russia had returned to pre-crisis levels.^[56][57]

In 2011 production of the classic Fiat 124-based 2105 and 2107 series models was completely moved from the Togliatti plant to the IzhAvto plant near Izhevsk,^[58] to make space for the company's forthcoming 2016 model. In April 2012, AvtoVAZ confirmed the end of the model 2107 (Lada Riva or Lada Nova), after more than forty years.^[59]

Sales of the Lada Granta, a subcompact car developed in collaboration with Renault, started in December 2011.^[60] The Lada Largus was launched in the Russian market in the middle of July 2012.^[61]

In August 2012, the Lada XRAY concept car was launched at the Moscow International Automobile Salon, the XRAY was designed by chief designer Steve Mattin, formerly of Volvo and Mercedes-Benz.^[62] The second generation of the Lada Kalina, basically a facelifted first generation, was also revealed at the 2012 Moscow International Motor Show,^[63] the Kalina is also produced as the more powerful version named Lada Kalina Sport.^[64]

On 3 May 2012, the Renault-Nissan alliance has signed letter of intent to raise its stake in Avtovaz to 51.01%.^[65] On 12 December 2012, the Renault–Nissan Alliance formed a joint venture with Rostekhnologii (Alliance Rostec Auto BV) with the aim of becoming the long-term controlling shareholder of AvtoVAZ.^[66]

In the same year, it was announced that Avtovaz and Sollers plan to jointly produce vehicles in Kazakhstan,^[67] the plant, which will be open in 2016, will be built in Ust-Kamenogorsk, in the eastern part of the country, and will produce around 120,000 cars a year.^[68]

Recent developments[edit]

In November 2013, Bo Andersson joined AvtoVAZ as CEO,^[69] the first non-Russian to head the company,^[70] he became involved in conflicts with local suppliers, which he accused of supplying low-quality products.^[71]

The takeover of AvtoVAZ was completed in June 2014, and the two companies of the Renault-Nissan Alliance took a combined 67.1% stake of Alliance Rostec, which in turn acquired a 74.5% of AvtoVAZ, thereby giving Renault and Nissan indirect control over the Russian manufacturer.^[72]

In 2014, AvtoVAZ sold 448,114 vehicles, down 16.3 percent comparing to the previous year, due to the overall market slowdown in Russia.^[73] The total production of the Togliatti factory is 910,000 vehicles.^[74] By 2014 the company's liabilities exceeded assets by 68 billion rubles, leading auditor Ernst & Young to express “significant doubt” about the company's “ability to continue as a going concern”.^[75]

In 2014, the Largus got a new modification, the Lada Largus Cross;^[61] in the fall of 2014 AvtoVAZ began production of a new Kalina model, the Lada Kalina Cross.^[76]

Production of the Lada Vesta, based on a new b\C platform developed by AvtoVAZ in cooperation with Renault-Nissan Alliance, started on September 25, 2015 at Lada Izhevsk manufacturing site, for the first time in LADA history, one year has passed between concept-car and start of production.^[77] Lada XRAY is the first compact city crossover in company’s history. Starts of sales was held on February 14, 2016.^[78]

Total Lada sales in 2015 amounted to 269,096 cars, of which 207,389 were built by AvtoVAZ in Tolyatti, while the rest were made by Lada Izhevsk, giving the company a 17.9% share of the Russian automotive market.^[12]

In March 2016 Nicolas Maure became the company's CEO;^[79] in April 2016, Carlos Ghosn, Renault-Nissan Chairman, ceded his AvtoVAZ chairmanship position to Sergey Skvortsov, Deputy General Director of Russian state-owned Rostec, the minority shareholder in Avtovaz.^[2][3]

Despite massive layoffs since 2008, the company continues to be unprofitable as of 2016;^[80] in October 2016 Renault invested $1.33 billion in another recapitalization of AvtoVAZ, this time without involvement from Nissan, making the company a subsidiary of the French group.^[81] In September 2017 Nissan sold its AvtoVAZ stake to Renault for €45 million.^[82]

Company structure[edit]

Ownership[edit]

After its re-establishment as a joint stock company in 1993, the ownership structure of AvtoVAZ became opaque, with two different management groups controlling the majority of the shares, one led by company chairman Kadannikov, holding 33.2% through the AVVA company, while another group held 19.2% through the AFC company. AvtoVAZ, in turn, owned over 80% of AVVA, which was said to be under the influence of Boris Berezovsky.^[20]

AvtoVAZ's current majority owner is Alliance Rostec Auto B.V. with 64.6%, which is a joint venture of the Renault–Nissan–Mitsubishi Alliance with 40.7% and Russian company Rostec with 21.2% of shares,^[6] which means that the Renault-Nissan-Alliance owns about 26.3% of AvtoVAZ' shares. Following the latest recapitalization of the company in 2016, Renault holds over 50% of the company, making it a subsidiary of the French group.^[8]

Subsidiaries[edit]

Production sites for Lada vehicles in Russia:^[83]

• Tolyatti plant: 3 assembly lines, producing 312,000 cars in 2016;^[84]
• Lada Izhevsk: one assembly line, producing 96,000 cars in 2016;^[84]
• ChechenAvto: based in Argun, produced 6,700 cars in 2016.^[85]
• PSA VIZ Avto: produced 4,146 cars in 2015. Includes VAZInterService – production of commercial vehicles based on Lada models, and PSA Bronto – production of off-road and armored derivatives of Lada cars.^[86]
• Lada Sport: produced 3,153 cars in 2015.^[86]
• Super-Avto: produced 569 cars in 2015.^[86]

Currently produced models[edit]

Developed by AvtoVAZ[edit]

• Lada Niva 4x4 VAZ-2131 (off-road car, since 1977)
• Lada Priora VAZ-2170 (compact car, since 2007)
• Lada Granta VAZ-2190 (subcompact car, since 2011)
• Lada Kalina II VAZ-2192 (supermini, since 2013)
• Lada Vesta (compact car, since 2015)
• Lada XRAY (crossover, since 2016)

Developed by other companies[edit]

• Chevrolet Niva VAZ-21236 (since 1998)
• Lada Largus (since 2012)
• Nissan Almera (since 2012)
• Renault Logan (since 2013)
• Datsun on-Do (since 2014)

Export[edit]

Exports of AvtoVAZ vehicles to the West began in 1974; Ladas were sold as in several Western nations during the 1970s and 1980s, including Canada, the United Kingdom, France, Belgium, Luxembourg and the Netherlands, though trade sanctions banned their export to the United States. Under the original agreement with Fiat, the car could not be sold in competition with the 124 until its replacement (the Fiat 131 Mirafiori) had been released and all Fiat production of the 124 had ceased.

Economic instability in the former Soviet Union in the 1990s, tightening emissions and safety legislation meant that AvtoVAZ withdrew from most Western markets by the late 1997; in later years, Lada is again exported. The Lada is marketed in Russia, Belarus, Ukraine, Armenia and Azerbaijan, and within the European Union, it has been made available in the Czech Republic, Slovakia, Austria, France, Germany, Hungary, and Egypt.^[87]

In 2015, 28,461 Lada cars were exported, mostly to Kazakhstan (14,278 vehicles), Azerbaijan (4,690), Belarus (2,360), Egypt (2,128) and Germany (1,515).^[12]

Motorsport[edit]

In 1970, AvtoVAZ CEO Viktor Polyakov set the task to create sport versions of the Lada 2101, the engines were built in Italy, whereas fine tuning was done by engineers in Togliatti. In 1971, three sport cars based on the 2101 model took part in the Soviet Winter Rally Championship.^[88] Later in the same year, a VAZ-Autoexport team earned their first prize, the Silver Cup in the 1971 Tour d'Europe.^[89]

In the 1970s–1980s, the Autoexport racing team, using different Lada models, participated in different motorsport competitions. A special Zhiguli class was created for the Soviet Rally Championship. There were different rally and track races featuring Avtovaz sports cars; in 1978, a Lada Niva took part in the famous Dakar Rally. It was also successful in a number of international competitions;^[90] in 1981, Guy Moerenhout Racing made two special models for Lada Belgium: Lada 21011 RS Sport, model with two Weber carburetors and special sport equipment, and Lada Niva Dream, with big wing extension, special colours and larger wheels. In the late 1990s, Lada Canada supported a rally operation in the Canadian Rally Championship, winning in the 'Production 1750' class on numerous occasions.

In 2012, the Lada Granta Cup was launched, the first stage of the new race series began in Moscow on the Myachkovo race track.^[91]

World Touring Car Championship[edit]

In 2008, AvtoVAZ took part in the WTCC World Championship, raced and developed by Russian Bears Motorsport, although badged as a factory team, the team raced the Lada 110 in the 2008 season, but ran a trio of Lada Prioras in the 2009 WTCC. The team scored their first championship points at Imola with renowned BTCC two-time champion James Thompson.

Lada withdrew from the WTCC for the 2010 season, but returned in 2012, with TMS Sport entering a Lada Granta WTCC for Thompson in two rounds, the team added a second car for the 2013 season, driven by Alexey Dudukalo, and achieved their best result to date, finishing fifth in their home race in Russia.

In 2013, AvtoVAZ returned to the WTCC championship. The team received a new car: the Lada Granta WTCC with the new driver, WTCC World Champion Robert Huff.^[92]

The team returned for the 2014 World Touring Car Championship season,^[93] again fielding a Granta. Since the beginning of 2015, the Lada team takes part in the WTCC as Lada Sport Rosneft.^[94] Starting with the 2015 season, Lada Sport currently uses Lada Vesta.

Sponsorship[edit]

HC Lada Togliatti, an ice hockey team currently playing in the Kontinental Hockey League, takes its name from the marque. They won two league titles as well as the 1996–97 European Cup.

Lada sponsored Aldershot Football Club of the English Football League for two seasons leading up their bankruptcy in 1992. Lada also sponsored Colo Colo (Chile) during their championship season in 1991.

Lada sponsored the Renault F1 Team in 2010 after they signed Russia's first Formula One driver Vitaly Petrov.^[95]

See also[edit]

• List of AvtoVAZ vehicles
• Automotive industry in the Soviet Union
• Automobile model numbering system in USSR and Russia

Notes[edit]

References[edit]

Further reading[edit]

• Siegelbaum, Lewis H. (2008). Cars for Comrades: The Life of the Soviet Automobile. Cornell University Press. ISBN 0-80-144638-4. 

External links[edit]

Wikimedia Commons has media related to AvtoVAZ.

• Lada official site (in English)
• Lada official site (in Russian)
• Lada at Curlie (based on DMOZ)
• Official history of Lada line-up (in Russian)
• Specifications cars AvtoVAZ (Lada)