In just one case study of the effect Western sanctions are having on Russia’s economy, production of a car long considered a symbol of the country’s post-Cold War “self-reliance” was halted on Wednesday now that its parent company has been shut down.” deprived” of “the parts and supplies it needs to make cars”, The Wall Street Journal reports per person with knowledge of the situation.
The homegrown Lada car factory has reportedly sent thousands of workers on leave, a hiatus once deemed “unthinkable” the log writes. A spokesman for Lada’s parent company AvtoVAZ said the company planned to halt production until March 11 due to the global chip shortage; he did not comment on the sanctions.
It is just the latest disruption to a Russian economy that is “starting to feel the bite of sanctions the West has imposed on Moscow” after President Vladimir Putin ordered an invasion of neighboring Ukraine, the log reports. More than 20 percent of AvtoVAZ’s parts come from outside Russia, sources familiar with the matter said.
“If trading stops, AvtoVAZ stops,” said a former board member of the company. “Putin knows he can’t do it alone.” The ex-member added that it could take months or perhaps years to restart production without French carmaker Renault SA, which now owns AvtoVAZ.
With that in mind, Russia would face a “shortage of new vehicles if automakers like AvtoVAX remain paralyzed.” Lada is the country’s only native brand with a “significant market share”, and is also “part of Russia’s national psyche”, comparable to General Motors for the US, the log writes.
“They still have to move whether the country is at war or not,” Thomas Besson, an analyst at brokerage firm Kepler Cheuvreux told the log† “That still requires someone to make the cars.”
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