MOSCOW - Russian automaker Avtovaz has announced a reduction in its production forecast for Lada vehicles by 10%, bringing the new target to 360,000 units from the initial goal of 400,000. This decision comes as the company faces significant logistical and financial challenges due to Western sanctions.
In a recent hearing, Avtovaz President Maxim (NASDAQ:MXIM) Sokolov highlighted the severe impact of U.S. sanctions, including the company's inclusion on the Specially Designated Nationals (SDN) List, which has led to substantial payment blockages from foreign banks. These restrictions have adversely affected both exports and imports, necessitating a revision of production targets by nearly 40,000 cars.
Last week, at a transport event, Sokolov reiterated the company's efforts to maintain conveyor productivity and model sequence integrity despite these hurdles. However, adjustments have been made to the pace of the Vesta's second shift, and weekend operations have been halted to cope with the ongoing disruptions.
Despite these setbacks, Avtovaz has demonstrated resilience over the past year. From January to October 2023, the company managed to produce 293,000 vehicles and nearly doubled its Lada sales compared to the previous year, with approximately 283,500 units sold. This was achieved even as Avtovaz faced early adaptation challenges when initial sanctions took effect in early 2022.
The automaker is actively seeking support from the Russian government to mitigate the effects of these disruptions and is committed to achieving its adjusted production goals. Avtovaz's focus remains on maintaining its manufacturing commitments despite the challenging circumstances imposed by international sanctions.
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