Avtovaz Considers Reducing Workweek to Four Days Amid Sales Decline

According to foreign media reports, Avtovaz, Russia's largest car manufacturer, is considering reducing the workweek from five days to four. This move is rare for a major state-owned enterprise in Russia, driven by high interest rates and competition from Chinese automakers that have pressured Avtovaz's sales. In a statement, Avtovaz noted, 'We are facing issues including high benchmark rates and stricter requirements for auto loan applicants from regulators. Additionally, a large influx of imported vehicles into the Russian market has led to aggressive pricing strategies from foreign brands.' Avtovaz further stated, 'The final decision on implementing a four-day workweek will be made after analyzing market trends and economic factors, including the trajectory of benchmark rates and conditions in the credit market.' If the plan is approved, the shortened workweek will start in late September. Avtovaz has been working to attract more car buyers, with the company projecting a 25% decline in overall sales in the Russian automotive market this year, primarily attributing the issue to the central bank's high interest rates. Recently, Russia's benchmark interest rate has remained at its highest level in over 20 years. High rates not only diminish consumers' willingness to apply for auto loans but also increase production costs, prompting government officials and business leaders to pressure the central bank to expedite the reduction of borrowing costs. Avtovaz employs over 30,000 people, mostly located in Togliatti, 800 kilometers southeast of Moscow, but the company has not disclosed specific employee numbers. According to automotive industry statistics agency Autostat, Avtovaz's sales fell by 25% in the first half of this year to 155,481 vehicles. Following the outbreak of the Russia-Ukraine conflict in 2022, which brought Western sanctions and the withdrawal of international automakers, Avtovaz had previously implemented a three-month four-day workweek. Data showed that its main brand, Lada, saw sales halve, plunging by 48.2% year-on-year, with only 174,688 units sold throughout 2022. The Russian automotive industry had heavily relied on foreign manufacturers, but after their exit, the market saw a significant decline in 2022. With Chinese automakers quickly filling the gap, the local automotive market has gradually begun to recover. Currently, Chinese automakers account for over 50% of sales in the Russian market, compared to less than 10% before the Russia-Ukraine conflict.