TOGLIATTI, Russia (Reuters) -- Hundreds of workers at Russia's biggest carmaker on Thursday demanded the state nationalize AvtoVAZ after management decided to slash wages as sales of its Lada cars tumble.
About 2,000 AvtoVAZ workers gathered for several hours in the city of Togliatti, which lies in Russia's industrial heartland on the Volga river 900km (560 miles) southeast of Moscow.
AvtoVAZ, owned by France's Renault SA and a Russian state-owned corporation, has denied it plans massive layoffs but workers' wages will be cut to half their pre-crisis level starting September 1 as hours have been slashed.
"The Unity union has taken the decision to demand the nationalisation of AvtoVAZ," the leader of the main independent union at the plant, Pyotr Zolotaryev, told workers at the protest.
"Let the plant belong to the state not private owners," he said.
Workers chanted "Give us wages" and "No more cuts" and demanded the management of the company -- which says it accounts for a quarter of Russia's car market -- resign.
The union said as many as 5,000 people attended the meeting. A police spokesman said about 800 people took part. There was a large police presence but no arrests were reported.
Last year, Renault CEO Carlos Ghosn signed a deal to pay $1.17 billion for a quarter of AvtoVAZ, hoping to take a chunk out of what was then one of Europe's fastest-growing car markets.
Hit hard by recession
After a decade-long economic boom, Russia is in recession. Unemployment has soared and protests have erupted, raising concerns that the economic stability brought by former Kremlin chief Vladimir Putin could be under threat.
Prior to the start of the global economic downturn Russia was booming but things have been rough in 2009. The country's new-car sales were down 56 percent to 118,579 units in the first half. AvtoVAZ's volume dropped 41 percent to 28,851 Ladas in the first six months. The company has stopped its production line for August.
Workers will do a 20-hour week starting in September, which will push down monthly incomes to about half their pre-crisis level of 21,931 rubles ($706).
The company has denied reports it plans to lay off 27,691 people, or a quarter of its staff.
Soviet authorities built a new town, Togliatti, on the banks of the Volga river to house workers from the plant, which was set up in the 1960s with the help of Italy's Fiat S.p.A. to make cheap cars available to the Soviet masses.
As the Soviet Union crumbled, the plant was taken over by businessmen and plagued by criminal groups, which were only dislodged when Putin used the state arms exporter to wrest control of the plant.
Russian Technologies, a state corporation headed by Sergei Chemezov, who worked in East Germany while Putin was stationed there as a KGB spy, owns a quarter of AvtoVAZ. Renault and Russian investment bank Troika Dialog also own a quarter each.