Iconic Russian car maker reportedly forced to halt production due to Western sanctions

Lada car.
Lada car. MAXIM MARMUR/AFP via Getty Images

In just one on-the-ground example of the effect Western sanctions are having on the Russian economy, production of a car long considered a symbol of the country's "self-reliance" post-Cold War was brought to a halt on Wednesday now that its parent company's been "deprived" of "the parts and supplies it needs to make cars," The Wall Street Journal reports per individuals with knowledge of the situation.

The factory for the homegrown Lada car has reportedly placed thousand of workers on leave, a stoppage once considered "unthinkable," the Journal writes. A spokesperson for Lada's parent company AvtoVAZ said the company had planned to halt production until March 11 due to the global chip shortage; he did not comment on the sanctions.

It's just the latest disruption for a Russian economy "beginning to feel the bite of sanctions the West imposed on Moscow" after President Vladimir Putin ordered an invasion of neighboring Ukraine, the Journal reports. Over 20 percent of AvtoVAZ's parts are brought in from outside Russia, said sources familiar with the matter.


"If trade stops, AvtoVAZ stops," said a former company board member. "Putin knows that he can't do it by himself." The ex-member added that it could take months or perhaps years to restart production without French car maker Renault SA, who now owns AvtoVAZ.

That in mind, Russia would be facing a "new-vehicle shortage if car makers like AvtoVAX remain paralyzed." Lada is the country's only native brand with "significant market share," and is also "part of Russia's national psyche," similar to General Motors for the U.S., the Journal writes.

"They still need to move, whether the country is at war or not," Thomas Besson, an analyst at brokerage firm Kepler Cheuvreux told the Journal. "That still requires someone to make the cars."

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