Avtovaz does not rule out reducing production plan amid car market stagnation

MOSCOW. Jan 18 (INTERFAX) - The Avtovaz production plan of 500,000 Lada cars for the current year may undergo changes amid the stagnation of the car market caused by high interest rates, CEO Maxim Sokolov said.

"We understand there is now a certain stagnation in the market. In general, the market has been showing below-expected results for the third month in a row. Therefore, we understand that the first half of the year will not be easy. The weak demand for cars will possibly put pressure on our production plans. Because why produce products when they are not sold? It is too expensive today, considering the interest on a loan," Sokolov told reporters on Thursday on the sidelines of the Russia exhibition.

The Avtovaz CEO said that the company has not revised its recently announced plans to produce 500,000 Ladas this year. "But sales are not so easy to get, especially for expensive models. As for budget models, everything is more or less stable," Sokolov said.

Sales of Lada cars in January, he noted, "are slightly above plan," despite the fact that the first month of the year is usually not characterized by large market volumes. "Over the last ten years, regardless of the situation, Avtovaz January sales have always been in the range of 20,000 cars, more or less. Moreover, this month we planned 21,000, which correlates with our average statistical volume. So far, we are slightly above forecast, for today, I think, in the range of 400 cars. However, the market is very volatile, reacting to the high key rate and a higher-priced loan every time there is any macroeconomic news. Plus, as a rule, there is no government procurement this month," Sokolov said.

As reported, Lada sales in Russia in 2023 increased 86.9% to 352,572 units. However, Avtovaz had to reduce its production plan over the course of the year. Initially, the company wanted to produce just over 400,000 cars for the year, but after falling under American sanctions in September, difficulties emerged in the realization of these intentions. As a result, actual production volume was about 375,000 cars.