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

. Last Updated: 07/27/2016

Komarov Recalls Veteran As AvtoVAZ Starts Work

AvtoVAZ chief Igor Komarov sent the company off to a new start Tuesday by restarting the factory’s assembly line and announcing the appointment of an industry veteran to a key post overseeing production.

“We are going to effect change and reinforce our team with the people who know the plant,” Komarov said, Interfax reported. He announced that Vitaly Vilchik would be appointed to the position of executive vice president responsible for production and technical development.

Komarov said Vilchik’s responsibilities would include overseeing the development of new models and that more top management shuffles would follow.

The position of executive vice president was previously occupied by Igor Komarov, who became president following the departure of Boris Alyoshin.

Vilchik, 63, started working at the plant after graduating college in 1970 and made his way up the ranks within the company to president, holding the post from 2002 to 2005. He was the only top executive to stay on, as a vice president for production, after it came under control of Rosoboronexport in 2005. Although he announced his retirement in June, he returned to work after two weeks to oversee the production process. Vilchik heads the Tolyatti branch of the United Russia party.

“Vilchik knows all production cycles and processes on AvtoVAZ premises,” said Sergei Udalov, an analyst at Avtostat. Financial managers like Komarov will have to work closely with him to see where costs or jobs can be cut without hurting the production process, he said.

Historically, the factory has had to keep its production rate at 50,000 cars a month to break even, according to historical trends, Udalov said.

At its current rate of production the factory is loss-making. The company plans to produce 31,671 cars in September, including 2,295 cars for export, AvtoVAZ said in a press release Tuesday.

AvtoVAZ owes 42 billion rubles ($1.3 billion) to banks and another 25 billion rubles to Russian Technologies, Komarov said. In early July, then-president Boris Alyoshin put the total figure at about 53 billion rubles. The numbers indicate that AvtoVAZ’s debt to banks actually increased 14 billion rubles, despite the August stoppage, said Lenar Khafizov, an auto analyst at Rye, Man & Gor.

The company managed to reduce its inventories in August from 86,000 to 58,000 cars, Komarov said. “This gave us some money and a chance to take a breath,” he said.

Part of the reason may be that the company did not always work with dealerships to make sure production follows demand on certain models, Udalov said.

AvtoVAZ began working on a new half-time schedule on Tuesday, which will last until Feb. 28, 2010. Workers will be paid for only 20 hours a week, according to the new plan.