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. Last Updated: 07/27/2016

GAZ Could Make Cars for Others to Increase Cash Flow

WINDSOR, Ontario — Automaker GAZ is open to selling some of its production capacity to other automakers as it tries to streamline its operations and improve cash flow, its chief executive said Wednesday.

GAZ CEO Bo Andersson said passenger car sales in Russia were expected to improve slightly to 1.7 million units this year, after sales more than halved to 1.5 million units last year in a dramatic slump that saddled the industry with overcapacity.

Industry forecasts that Russian auto sales will recover to the pre-crisis level of about 3 million units by 2012 are "relatively reasonable," he added.

GAZ, controlled by industrial tycoon Oleg Deripaska and with 17 manufacturing facilities, has focused on cutting jobs and capacity in response to the crisis. In March it agreed to restructure all of its debt at 4 percent over the Central Bank's official refinancing rate.

"We have very large facilities, we have very good people, and we have good technology," Andersson said on the sidelines of a conference.

"If people want to use our capacity, we are willing to sell that capacity," said Andersson, who joined GAZ in mid-2009 from General Motors. He was a long-time Saab executive at GM, where he last served as the U.S. automaker's group vice president in charge of global purchasing and the supply chain.

GAZ, the only major Russian player without support from a Western manufacturer, said in March that it was in talks with more than one potential Western partner as it targeted a 25 percent sales rise in 2010.

Andersson declined to discuss any progress in the partnership talks but said automakers need to work together to operate in the "very difficult" Russian market.

To support its ailing auto industry, the Russian government has set aside 10 billion rubles — about $340 million — this year to encourage consumers to trade in their aging vehicles for new ones.

Andersson said the cash-for-clunkers program will help boost industry sales slightly in 2010 but it would have little impact on GAZ. The company is instead lobbying for a similar government incentive program to support sales of commercial vehicles, Andersson said, adding that no decision has been made yet.