Page 112 - RusRPTMay19

Granta cars were sold 10,422.
GAZ Group asks government for RUB30bn of state support Russia’s “other iconic carmaker” GAZ has asked the government for RUB30bn ($469mn) in subsidies after its owner oligarch Oleg Deripaska warned that the company is facing bankruptcy due to US sanctions imposed on the company last year. GAZ is the maker of the iconic Volga saloon car but has been struggling to become profitable in the face of rising foreign competition. And while the low-cost Lada made by Avtovaz has seen a revival thanks to the stagnant real incomes to become Russia’s best selling car again, the more expensive Volga can compete with the equivalently priced foreign-made cars. Swedish car specialist Bo Andersson had managed to cobble together a variety of projects at the company’s main plant in Nizhny Novgorod, but was sacked in 2016. The future of the plant has remained uncertain and the sanctions imposed last year created even more headaches. Now Deripaska is asking for government help. In late March, Vladimir Sorokin, the general director of the GAZ Group, sent a letter to Deputy Prime Minister Dmitry Kozak asking him to allocate RUB29.5bn to him in state support, according to Kommersant. GAZ is a major employer in Nizhny Novgorod and the closure of the plant, that was personally founded by Lenin, would be a major disaster for the region’s economy. The letter said that without this money, the concern sees the risk of default on its debt. Due to the sanctions GAZ was forced to increase the loan portfolio in 2018 by RUB20.7bn to RUB73.6bn. By the end of last year the company posted a loss of RUB11.3bn, while the company has been forced to spend all its own funds, including profit, on increasing the working capital, the letter said. The sanctions have been painful as they ban GAZ foreign partners, which supply materials and parts, from working with the company. Production in 2018 fell by 40% in the second half of the year due to the sanctions. This, together with the growing burden on working capital, means the company cannot service its loan portfolio. The company plans to use the money received from the state to subsidize the interest rate on loans, having doubled the portfolio of such subsidized loans, to RUB66.6bn, Vedomosti reported, due to the inability to service it under sanctions. In total, from 2019 to 2021 some RUB9bn is needed to service the debt.
Russian President Vladimir Putin took part in the official opening of a Mercedes-Benz assembly plant in the Yesipovo industrial park in the Moscow Region. Prior to the ceremony, he had inspected the new plant’s assembly line. The Kremlin press service reports that this line was installed based on the full flexible assembly system, using Industry 4.0 level technologies, which make it possible to arrange simultaneous production of several automobile platforms. The first car assembled in the plant will be an E- class sedan. Later, the plant will also assemble GLC-, GLE-and GLS-class SUVs. The plant’s construction began on June 20, 2017, in accordance with a special investment contract. This document guarantees a continual tax burden over the entire period of activity and includes a non-regression of conditions clause, which ensures the stability of the business. Mercedes-Benz RUS investments amount for €250mn.
9.2.3 Aviation corporate news
Russian medium-distance passenger aircraft Sukhoi SuperJet 100 (SSJ100) is being used more by domestic airlines, but the growth rate of its exploitation is much slower than that of foreign competing models, Vedomosti daily reported on April 25 citing internal statistics of the Rosaviatsia state
112 RUSSIA Country Report May 2019 www.intellinews.com