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. Last Updated: 07/27/2016

Report: AvtoVAZ Director Resigns

AvtoVAZ general director Igor Yesipovsky has resigned, strengthening the possibility that a foreign carmaker like Renault may buy into the company, Kommersant reported Monday.

The resignation -- and the lack of a single vision for AvtoVAZ -- may spell trouble for the Kremlin's grand plan to turn around the ailing carmaker and make it the centerpiece of a vast holding under state arms trader Rosoboronexport.

AvtoVAZ is due to consider Yesipovsky's resignation at a board meeting Tuesday.

Yesipovsky, a former senior Rosoboronexport official, resigned Saturday due to a growing rift with Alexander Pronin, his first deputy, over the carmaker's future strategy, Kommersant said, citing a source in the Tolyatti-based carmaker.

Yesipovsky, who was transplanted from Moscow to Tolyatti after the Rosoboronexport takeover last year, has been opposed to AvtoVAZ selling a stake to a foreign carmaker, Kommersant said. Pronin, a co-founder of AvtoVAZ's largest car dealer, Eleks-Polyus, was in favor of doing so, the paper said.

If the board approves Yesipovsky's resignation, AvtoVAZ board chairman Vladimir Artyakov, Pronin and the head of a Moscow-based trading structure -- currently in the making -- will oversee AvtoVAZ from Moscow, Kommersant said. Yesipovsky would be excluded from control of car sales and the company's finances, the newspaper said.

"In this situation, you have no choice but to submit your resignation," Kommersant quoted the source as saying.

The board will most likely approve the resignation, with Maxim Nagaitsev, currently AvtoVAZ vice president for technology, becoming acting general director, the source told Kommersant.

Rosoboronexport took over at AvtoVAZ amid great fanfare last December. Longtime board chairman Vladimir Kadannikov stepped down in October, reportedly after a meeting with Kremlin officials. In February, the new managers said they planned to invest billions of dollars in new facilities and a dozen new models over the next few years, roughly doubling production capacity.

Vladimir Yakushenko, a spokesman for Yesipovsky, declined to comment on the report but admitted there were rifts within the management team.

"There were different approaches," he said. But "every big company has various visions," he added.

Ivan Skrylnik, a spokesman for Artyakov, who is also deputy director at Rosoboronexport, declined to comment ahead of Tuesday's board meeting.

Spokespeople at Rosoboronexport also declined to comment Monday.

Despite having grand plans, Rosoboronexport has yet to flesh out how it will turn around the carmaker.

"The company hasn't done anything positive," said Alexander Zhukov, an analyst with Metropol brokerage. "The 2005 financial results are awful." AvtoVAZ posted a 2005 net profit of $51 million, down from $207 million in 2004.

Deutsche UFG in a research note called the current situation at AvtoVAZ "dire" and called the disagreement among state managers "strange."

Andrew Boyle, a Renault spokesman, declined to comment Monday on whether a change at AvtoVAZ would impact any possible tie-up between the two companies.