MOSCOW, October 15 (RIA Novosti) - Russia's Industry Ministry has concluded that the government should not bail out AvtoVAZ, the country's largest carmaker, a business paper reported on Thursday.
The ministry has prepared an expert report on the request of First Deputy Prime Minister Igor Shuvalov on whether the government should allocate up to 70 billion rubles (around $2 billion) to rescue the ailing car giant from closure. The document was sent to the government about two weeks ago, Kommersant wrote.
The conclusion says that the car giant is effectively bankrupt and it is useless to pump money into it. The situation can be remedied only by dismissing as many as 50,000 of the 100,000-strong workforce and the ministry proposes spending money on stabilizing the situation on the labor market in the Samara Region in the Volga area where AvtoVAZ is located, the paper said.
The company's partnership with Renault, which holds a blocking stake in the car giant, will not save AvtoVAZ either as the French concern already is not interested in the factory's development, the paper said.
According to the paper, the conclusion is the first objective assessment of the situation around AvtoVAZ, but the government is unlikely to support it. Prime Minister Vladimir Putin said on October 5 that the government would never allow AvtoVAZ to collapse.
AvtoVAZ has production capacity of over 800,000 vehicles annually. It has made more than 25 million Lada cars since it was established in 1970 as a joint project with Italian carmaker Fiat. The company currently produces 15 models priced between 150,000 rubles ($4,800) and 350,000 rubles ($11,240).
