Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Putin Offers More Cash to AvtoVAZ

VedomostiA banner hung across a street in front of the Kremlin reading, “AvtoVAZ, moving forward together with Russia.”

Prime Minister Vladimir Putin on Monday pledged more funds to help restructure troubled carmaker AvtoVAZ but failed to secure a firm promise from shareholder Renault to join the plan.

On Friday, Putin delivered an ultimatum to Renault to either help finance AvtoVAZ or see its 25 percent stake reduced.

On Monday, he met AvtoVAZ directors, including Renault senior vice president Christian Esteve.

“I would like to see all shareholders take an equal part in this work, and all [participants] can be sure that the government will do its utmost to ensure the interests of all shareholders,” Putin said.

Esteve told Putin that Renault was keen to develop in Russia, but he refrained from making a firm pledge.

“Our main desire is to remain your partners. I think that all decisions taken by AvtoVAZ are very painful but necessary. You can rely on Renault. We feel socially responsible, and that goes for AvtoVAZ’s business plan too,” he said.

“We will work out a new model line for AvtoVAZ. For that we need good parts suppliers,” he added.

Renault bought a quarter of state-run AvtoVAZ for more than $1 billion two years ago. Under Russian legislation, only a stake of 25 percent or more gives a shareholder the power to block board decisions.

AvtoVAZ has said it would have to cut a quarter of its staff, or 27,600 people, in the largest round of job cuts in a single city, Tolyatti.

The cuts, which come amid a 44 percent decline in sales of AvtoVAZ’s Lada, will test the ability of Putin’s government to avoid unrest as a sharp recession follows a decade of boom.

AvtoVAZ has grown used to decades of state cash injections to stay afloat.

Hopes of modernization soared when Renault bought the stake, but the global financial crisis delayed many of Russia’s restructuring plans as budget revenues fell.

Putin visited AvtoVAZ six months ago to pledge $1 billion in state support to avoid what he described as the General Motors scenario, where 34,000 people were fired.

“AvtoVAZ needs restructuring,” Putin said Monday.

“We all understand that, if we do nothing, the enterprise will be sick for a long time and then will simply cease to exist. We can’t afford this happening.”

He did not say how much more money the government would commit in addition to the 25 billion rubles ($830 million) already disbursed.

A government commission led by Putin’s first deputy, Igor Shuvalov, will meet on Tuesday to discuss measures to help all Russian car producers.