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AVTOVAZ OPENED ENGINEERING CENTER IN SAINT PETERSBURG

AVTOVAZ has opened a new regional branch of its R&D in Saint Petersburg. AVTOVAZ’s engineering center in St. Petersburg is located in the business complex NEVKA. A new AVTOVAZ unit takes 1500sm in these historic building. A new center is designed for 160 high-quality jobs. Employees will be engaged in the development of the Russian component production, new component and system development, engineering and technology support of car production in St. Petersburg, cooperation with universities, suppliers support in the system engineering area. Thus, a new center will not only add the existing AVTOVAZ units in Togliatti and Moscow, but will also organically fir in the St. Petersburg auto cluster. Students of various St. Petersburg universities, including future designers, will be able to undertake an internship in the AVTOVAZ R&D in St. Petersburg. Style designer of the LADA NIVA Legend Valery Semushkin is one of the graduates of such universities, Stieglitz State Academy. Practice in the Engineering center will give the students a possibility to take part in real industrial projects, to make contribution to the Russian auto industry development.

AVTOVAZ HAS DECIDED TO CONDUCT AN ADVANCED INDEXATION OF TARIFF RATES AND EMPLOYEES` SALARIES

On January 19, AVTOVAZ President Maxim Sokolov held a meeting with Sergei Zaitsev, the Chairman of the Primary Trade Union Organization of AVTOVAZ, JSC ASM RF. The parties discussed the results of the enterprise’s work in 2023 and the plans facing the automobile plant. One of the main topics of the meeting was working with personnel and fulfilling mutual production and economic obligations. It was noted that due to the sharp increase in production plans, the Company began massive recruitment of new workers at an accelerated pace, and continues it today. Thus, at the end of last year, the company’s staff increased by more than 2,600 people. The main sources of recruitment remain the city of Togliatti and the Samara region - in the total volume of recruited personnel, the domestic region of the plant occupies about 90%. The parties discussed that work on further staffing of AVTOVAZ will continue with a focus, first of all, on the labor potential of Togliatti and the Samara region. At the meeting, a significant increase in wages at the enterprise was also noted: over the past year, the average accrued salary for all personnel increased by 40.5% - to 71,715 rubles. (51,047 rubles in 2022), and for main workers by 57.1% - up to 74,435 rubles. (47,376 rubles in 2022). The implementation of the collective agreement is considered separately. In 2023, all activities were completed in full. AVTOVAZ allocated 2.3 billion rubles for these purposes, which is 17% more than in 2022. Moreover, the Company allocated an additional 1 billion rubles to improve working conditions and update social infrastructure (sanatoriums, recreation centers, social facilities). Another topic of discussion was support for mobilized workers and their families. AVTOVAZ systematically carries out the relevant work. Responsible persons have been appointed at each production site to be assigned to the families of the mobilized. Assistance is provided in solving everyday and financial issues, vouchers for treatment and recreation are allocated, and other pressing requests are resolved. At the conclusion of the meeting, the parties noted the need to maintain a constructive partnership between the management of the enterprise and the trade union to resolve issues relevant to the workforce. Also, the Chairman of the Primary Trade Union Organization of JSC AVTOVAZ, Sergei Zaitsev, noted that an effective measure to facilitate the further recruitment of the car plant’s team in the context of an increase in the car production plan to 500 thousand units, as well as maintaining the purchasing power of the wages of existing employees of the enterprise will be the advanced indexation of tariff rates and salaries. In this regard, it was proposed to shift the indexation date fixed in the collective agreement from July 1 to February 1 of the current year. Based on the achieved results of production and economic activities, the President of JSC AVTOVAZ Maxim Sokolov supported this proposal. Indexation of tariff rates and salaries for employees of AVTOVAZ JSC and subsidiaries in Togliatti and Izhevsk from February 1, 2024 will be 9%. Maxim Sokolov, President of JSC AVTOVAZ: "AVTOVAZ finished 2023 with positive financial indicators. This is largely the result of the systemic support that we received from the President of the country, Vladimir Putin. Taking this into account, we supported the proposal of the trade union committee to advance the indexation of wages in the Company by a significant 9%. Our team of thousands is the main asset of AVTOVAZ, and we will continue to fulfill our social obligations to the team and maintain the purchasing power of wages at the highest possible level for the Company. I am confident that these measures will help us achieve the ambitious goals of 2024 to launch new models and produce up to 500 thousand cars."

AVTOVAZ STARTED PRODUCTION OF LADA LARGUS PILOT BATCH IN IZHEVSK

Lada Izhevsk car plant, part of AVTOVAZ group, started production of a pilot batch of LADA Largus cars. The first five vehicles to be produced by the end of this week will be commercial vans. Maxim Sokolov, President of JSC AVTOVAZ: "Our specialists managed to move Largus assembly facilities from Togliatti to Izhevsk in the shortest possible time and to perform commissioning work. We will now begin to assemble a pilot batch, which will totally make about 80 cars by May. They will be used to test full-cycle production technologies, conduct personnel training, and validate equipment parameters and settings. Our plant is "coming to life" after break. We are recruiting new staff at competitive wages and confirm plans to begin full-scale production of the country’s most popular light commercial vehicle in May." Decision to transfer the production of LADA Largus cars from the main site in Togliatti to Lada Izhevsk plant was made in late summer 2023. This was necessary to free up capacity for the production of new models on LADA Vesta platform in 2024-2026.

LADA IZHEVSK LAUNCHED TEST ASSEMBLY OF LADA LARGUS PASSENGER VERSIONS

Lada Izhevsk car plant continues to produce a pilot batch of LADA Largus cars. In addition to vans, assembly of which began last week, Largus passenger versions have entered test production. It is worth reminding that it is planned to produce in total about 80 cars by May 2024, which will further be used to adjust full production cycle processes and train personnel. President of JSC AVTOVAZ Maxim Sokolov: "We see that Largus is in high demand in the market, and we are making every effort to restart serial production of internal combustion engine vehicles in May with appropriate level of quality and in required volumes." "As for another Izhevsk model, the first Russian highly localized electric vehicle e-Largus, we confirm plans to put it into production line in the third quarter of 2024. However, its production output will directly depend on demand and additional balancing of government support measures. e-Largus competes in price with non-localized Chinese electric vehicles. Their added value is generated abroad, but at the same time, buyers of these cars in Russia receive government support, the amount of which is actually equal to the price of a new LADA Granta car in average version. We believe that current situation requires fine-tuning of the mechanisms for stimulating demand in order to keep state support funds within the country, ensuring strengthening of the technological sovereignty of domestic car industry as part of the implementation of instructions of the President of Russia," Maxim Sokolov emphasized separately.

Maxim Sokolov: "Investments, competencies and jobs in the Russian automotive industry need protection"

Mr. Maxim Sokolov, the President of JSC "AVTOVAZ", held a meeting of the Expert Council under the Committee on Industry and Trade of the State Duma of the Russian Federation, dedicated to the development of the automotive and component industries, as also to the threats hindering their further growth and achievement of the technological sovereignty. The Council is composed of the key experts in the automotive and component industries. In his report Maxim Sokolov addressed the most challenging issues, particularly the expansion of imported cars from China, the range of measures proposed to protect the domestic market, along with the initiatives on the ELV fee indexation amount to encourage foreign companies' investments in the automotive manufacture localization inside our country. "In Russia foreign automotive OEMs are pursuing the large-scale price expansion program, - Maxim Sokolov stated. – Speaking of China, last year the PC sales there exceeded 26 million units, affording an opportunity for their brands, due to the scale effect, to give the long-term and almost uncapped discounts in foreign markets, including the Russian one. Let me give as an example one Chinese off-roader being popular in Russia, just recently its discount amounted to 900 thousand rubles, that is three times higher than the average ELV fee. In other words, as of today the protective barriers in the domestic market are not sufficient for encouraging the foreign automakers to switch from importing finished cars into the Russian Federation to investing in the development of industrial manufacture inside our country." Since mid-2023, the Chinese brands have been cumulatively holding over a half of the PC market in Russia in quantitative terms, having reached a record 60% in December last year. "In monetary terms, the situation is even more dramatic, - Mr. Sokolov highlighted. - AVTOVAZ, covering more than a third of the Russian market in units, financially controls a share just slightly over 9%. It means that the remaining 90% of the funds are being simply washed out of Russia abroad, to where the added value is generated, to where foreign engineers, workers, and component suppliers are having their jobs. In the truck segment, the situation is no less concerning, it is Chinese manufacturer that has been keeping podium in quantitative and in monetary terms for several months now." The situation as it has developed, poses a real threat not only to the development of, but also to the sustainable existence of the domestic automotive industry and component industry in the medium term. To date, the industrial cooperation with AVTOVAZ alone employs more than half a million people in the central regions of the country. In the absence of efficient mechanisms encouraging the foreign automakers' investments in the local manufacture development, money will continue being washed out of the Russian economy. According to experts, if current trends continue staying in force, the domestic automotive OEMs will be bound to cut production down to 50% due to the forced switch to the one-shift operation mode (instead of two-shift), caused by a dropping demand in their price segments, where, through the large-scale discounts, imported Chinese cars are going to have presence. Under these circumstances, the Russian companies will have to make just low-tech outdated products only, being unable to finance their R&D and capacity development, so as unable to create new high-tech jobs. All of these will adversely affect the achievement of technological sovereignty and industrial growth. Following the meeting of the Expert Council, the attendees supported the proposals aimed at protecting the Russian automotive and component industries. In particular, the initiative has been put forward to consistently increase the ELV fee, which should facilitate the foreign companies' investments in the local manufacture setup and development. As part of the Council panel discussion, the expert community proposed setting the step-by-step progressive scale of the ELV fees for the passenger cars, commercial vehicles and trucks, agricultural, construction and road engineering vehicles, buses, and electric vehicles. In the short run, the detailed proposals by the Expert Council will be submitted to the Committee on Industry and Trade of the State Duma and to the relevant executive branch. "The initiatives of our Expert Council to strengthen the measures to protect the local market are based on the state approach. The national automotive and auto component industries are ready to face up the fair market competition. But for this, all players shall compete within the single legal and market field. We stand for there to be more number of localized automotive productions in Russia, both under national and foreign brands. And let them bring a wide choice of models to the market and compete with each other for the domestic buyers' attention. Thanks to increased market protection, imports of finished cars shall be replaced by investments in their manufacture inside the country. Local manufacture in Russia will be growing up, there will be more orders for the component industry, new technologies and jobs will appear, the cost of components will decrease, prices for new cars will go down, and thus the market will grow. Each of us, being a citizen of Russia, is evidently interested in the situation evolving this way," - AVTOVAZ President Maxim Sokolov emphasized.

AVTOVAZ HAS REVIVED THE WHOLE LADA LINE-UP

Mass production of LADA Largus started on May 15, 2024 at the LADA Izhevsk plant being a part of the AVTOVAZ Group. Passenger station wagon in Classic version and commercial van became first vehicles which rolled off the assembly line. The ceremonial event in Izhevsk was attended by the Head of the Udmurt Republic Alexander Brechalov, President of JSC AVTOVAZ Maxim Sokolov and other officials. Thus, AVTOVAZ has revived the whole profitable line-up of the cars which production was interrupted after the exit of the foreign partner in 2022. The relocation of LADA Largus manufacturing from Togliatti to Izhevsk allowed to optimize the production of LADA cars in the AVTOVAZ Group and make a basis for further development of the brand - the capacity of Line No. 1 in Togliatti will be used for production of executive sedans LADA Aura this autumn and an upcoming crossover vehicle on LADA Vesta platform in the beginning of 2026. The relocation of Largus production line became a unique example of large-scale, prompt and qualitative transformation of the plants inside the AVTOVAZ Group. During the period from September 2023 to January 2024, more than 1200 units of equipment were relocated, mounted and started. 13 stamped parts were industrialized in stamping shop of the Izhevsk plant, mostly exterior elements - roof, doors, fenders, hood, body sides. By the end of the year, it is planned to produce also big-size and mid-size stampings - totally more than 60 parts. 13 robots have been mounted in body shop and 5 basic colours have been adopted in paint shop: Icy, Platinum, Panther, Borneo and Coriander. The assembly line was also modernized its dynamic test benches were specially calibrated for LADA Largus. Before the start of mass production, a test lot of bodies and finished vehicles was produced which testing confirmed high quality level. Totally 50 000 LADA Largus vehicles are planned to be produced in Izhevsk till the end of this year, including the most localized Russian electric vehicle e-Largus. Start of sales of Largus family will be announced in the coming weeks, recommended retail price of these vehicles will start from 1 660 000 rubles for a passenger version and from 1 670 000 rubles for a commercial van. President of JSC AVTOVAZ Maxim Sokolov: "Start of LADA Largus production is one of the main events in this year for our brand and for AVTOVAZ. Today we celebrate the revival of production of the whole profitable LADA line-up which was interrupted in connection with the exit of the foreign partner. But it does not mean that our team will stop at the achieved results. The Board of Directors of AVTOVAZ chaired by First Deputy Prime Minister of Russia Denis Manturov approved the development strategy for AVTOVAZ according to which we are going to have a great many of both new products and updated versions of the current model range in the coming years. I thank the whole team of LADA Izevsk and their Tolyatti colleagues for their labor. I am also grateful to the Union of Machine Engineers of Russia, the Government of Udmurtia, the country leadership, the Ministry of Industry and Trade and other federal ministries and departments for comprehensive support to the project for localization of the Largus platform. Together we move only forward!" Alexander Brechalov, the Head of the Udmurt Republic, noted: "For 7 years of my work in Udmurtia, I have experienced different emotions associated with AVTOVAZ and Lada Izhevsk site ranging from delight and pride to worries about company`s future when rough time came. There were fair emotions from the plant employees and residents of the Republic, because Lada Izhevsk is a brand and a part of Udmurtia and its capital. We have unique history, people and their competencies. Veterans of the plant never lost hope for the revival of automobile production. I would like to thank them for this faith. Today a historical event took place in the life of all of Udmurtia - Lada Izhevsk relaunched the assembly line. I would like to thank the First Deputy Chairman of the Government of the Russian Federation Denis Valentinovich Manturov and the President of AVTOVAZ Maxim Yurievich Sokolov for making it happen."

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