June 28, 2013
Driving AvtoVAZ on New Roads with the Renault-Nissan Alliance: Komarov
June 28 – Togliatti, Russia – Russia’s top automaker AvtoVAZ hosted this week visiting Renault-Nissan Alliance executives, including CEO and Chairman Carlos Ghosn, who toured facilities with Igor Komarov, President of AvtoVAZ, and met other officials.
The Alliance and Russian Technologies State Corporation created a joint venture to hold equity interests in Russia’s largest car company, the owner of the Lada brand, and the Alliance is now the largest shareholder.
Ghosn became on Thursday chairman of the 15-member AvtoVAZ Board of Directors, which also includes eight people from the Alliance.
AvtoVAZ remains an independent company under the Russian management of Komarov, and the Global Media Center spoke with him on changes at the automaker since his arrival in 2009, working with the Alliance, and the outlook ahead.
Global Media Center: Since you joined AvtoVAZ in 2009, there have been a number of changes at the automaker and Lada brand, including the Alliance relationship. How have things evolved and what’s the outlook ahead?
President Igor Komarov:
Things evolved very fast and constructively in an effective way. One of the key conditions of our success was the involvement and support of one of the biggest and strongest Alliances of the world in Renault and Nissan.
We have now cooperated for almost three years, starting from the supplies, engineering, manufacturing and the improvement of the processes, quality and training staff, and finishing with the sales and dealer network.
In all these fields we have programs and plans. We created groups of specialists that develop these fields for the benefit of all the parties and have seen success. We showed results of this cooperation, which are quite visible.
We’ve launched a new line and production of our first Lada car, the Largus, based on the Alliance platform. Six months ago we launched the first Nissan car, the Nissan Almera, designed for the Russian market, and in the near months are going to launch Renault cars, so we are moving fast. Then, at the beginning of next year we are going to launch a Datsun car based and developed with AvtoVAZ. After that we have a range of new cars and models we are going to develop and manufacture.
Global Media Center: Your background is in economics and finance. The AvtoVAZ plant shows a lot of investment, while staff seem upbeat about prospects ahead. Please characterize from a business perspective the changes and what’s on the horizon.
We managed to succeed in a few changes in our company due to the very fruitful cooperation and common efforts of four parties: the staff of AvtoVAZ; the shareholders, including the Alliance; the management team; and, the strong support of the government.
For a short period of time, we managed to reduce our staff by 30% – more than 30,000 people in a single year. We restructured our debt of 75 billion rubles – it’s close to 2 billion euros, for 20 years, with the aid of shareholder Russian Technologies and the Russian state.
Also, we spun off non-core activities and social assets, and a lot of asset debts, so for sure this helped us to raise efficiency and become an effective manufacturer. With the support of the Alliance we managed and launched new projects, and improved our quality, and the quality of the supply chain, so we changed a lot of standards and processes, and now I think we have much better results in quality and efficiency.
The most important thing is that our customers appreciate all the efforts we’ve made jointly.
Global Media Center: Lada and its models are No.1 domestically and the automaker also has an international presence. What is the trajectory for both, considering more competition lies ahead?
You are right, we face more and more competition, and it is becoming tougher. New models are brought by the leading manufacturers and world OEMs to the Russian market, and we see the success of many. On our side, we can use advantages of the Alliance – in engineering, manufacturing, marketing – and advantages that we have – bringing low-cost cars and efficiency in cost-reduction – to be competitive with other automakers and our competitors.
We think that together we may have reached the target set by Carlos Ghosn, president of the Alliance, of 40% of the market.
Global Media Center: Finally, looking back at the last four years and the road ahead, what areas or events are you proudest of?
The restructuring time – I think the best was bringing all together – AvtoVAZ staff, the government and shareholders – for the decisions. It was a unique opportunity, but we realized this was the only way to recover.
If we say the cars, it’s like a first baby: the first car that was launched in our plant, the Lada Granta, is the most popular car in Russia for 10 months, and every 15th car that is sold in Russia is a Granta. I think that is a huge success. I’m sure in the future we will have more chances to repeat this success, certainly for a Lada car, but we are not limited, and Nissan and Renault cars will have chances to be a success.
In cooperation with the Alliance, the main result and best experience is the need to be very transparent, straight, honest, and committed to a common result, and we find that despite the differences in cultures and languages, the professionalism and the devotion to achieve the result are the things that unite us. It will help us get results. That is very important and the best achievement of the Alliance, and I am sure we will keep doing it in the future.