TOGLIATTI, Russia -- AvtoVAZ has a civic responsibility to preserve jobs, Nicolas Maure, the company's new CEO, told Reuters, rowing back on a politically sensitive policy of redundancies in the face of plummeting sales and record losses.
In his first extended interview with foreign media since majority owners Renault and Nissan put him in charge in April, Nicolas Maure said he was working with local and regional authorities on a new strategy to balance social commitments and performance goals.
Surplus workers will now be offered transfers to third-party companies, Maure said, as management look to return AvtoVAZ to operating profit by 2018 even as Russian car sales plumb 10-year lows.
"We have some duties and responsibilities vis a vis the people and vis a vis the region and the city. We want to respect those duties," Maure said at his office in Togliatti, a city on the Volga river 800 km (500 miles) southeast of Moscow where AvtoVAZ employs around one in every 20 people.
"We contribute a lot to the local economy so it's important of course to keep as many jobs as possible."
Different tone to predecessor
Maure struck a noticeably different tone from his predecessor Bo Andersson, whose efforts to reduce staff costs and weed out shoddy local suppliers to protect profit margins came under fire from the carmaker's minority Russian shareholder.
That shareholder, state-owned defense conglomerate Rostec, increased its influence over AvtoVAZ in April, when one of its executives was named the carmaker's new chairman, replacing Renault-Nissan boss Carlos Ghosn.
Andersson left in March after cutting the workforce to around 43,000, down from 110,000 in 2008, and slashing shifts at plants in Togliatti and the Urals city of Izhevsk.
Job cuts are a sensitive issue for the Kremlin, which is worried about social unrest stemming from Russia's economic crisis.
Weathering the storm
As Russia's biggest automaker and producer of its top-selling Lada brand, AvtoVAZ has been hit hard by the collapse of the country's once-booming autos market, which plunged 36 percent last year on the back of a deepening economic downturn.
AvtoVAZ posted a record loss of 74 billion rubles ($1.16 billion) in 2015 on sales down 31 percent, prompting Renault to slash the value of its stake in the firm by 225 million euros ($253 million).
But Maure, who previously headed Renault's Romanian venture Dacia, said the Russian market was seen remaining at its current level in 2017 with sales recovering to around 2 million a year in four to five years, supporting efforts to retain workers.
PricewaterhouseCoopers estimates around 1.1 million cars will be sold in Russia this year.
AvtoVAZ has about 20 percent of the Russian light passenger vehicles market. As well as Ladas, it manufactures Renault and Nissan badged vehicles under contract. It sold 269,096 vehicles in 2015, and forecasts sales of around 260,000 this year.
The success of Lada's new Vesta model meant the company's Izhevsk plant was now safe, Maure said, adding full production had been restarted on one production line in Togliatti. "This wasn't the case when I arrived in April," he said.
AvtoVAZ announced an 85-billion-ruble recapitalization plan earlier this month as part of Maure's bid to revive its fortunes.
While some foreign carmakers such as U.S. car giant General Motors have closed plants in Russia, Maure said Renault had never considered walking away from AvtoVAZ.
"Renault still believes that the market will be back at a very high level one day," he said. "We are not an American company."
"We know we are in a kind of storm but there will be an end ... We will get through this storm."
