The owners of Russian car maker Avtovaz are searching for a new chief executive to replace Bo Andersson, sources told Reuters, weeks after the Lada maker reported a record loss that led to major investor Renault slashing the value of its stake.
The pressure on Andersson intensified last month when Renault, majority-owner with alliance partner Nissan, wrote down the value of its investment in the firm by 70%. Avtovaz also said it would need more cash from shareholders to survive.
Russian state-owned conglomerate Rostec, which owns a third of Avtovaz, had also recently castigated the CEO for his handling of thousands of job cuts at a time when Russia’s economy is sliding into a second year of recession.
Andersson, a 60-year-old Swedish former army major, could be replaced before his contract expires in December, perhaps as soon as the next board meeting in April, according to the two sources close to the company.
“They are searching for a replacement but haven’t found one yet,” one source said. “It’s possible they will let him work until the end of his contract.”
Avtovaz declined to comment.
The carmaker’s finances have been hammered by a prolonged decline in the Russian car market, which has fallen victim to an economic crisis fuelled by lower oil prices and Western sanctions over Moscow’s role in the Ukraine crisis.
But despite foreign involvement and a history of problems, Avtovaz has long been regarded by the Kremlin as a symbol of Russian corporate pride which cannot be allowed to go under.
Renault-Nissan owns a combined 67% of the holding company that controls Avtovaz. Rostec owns the remaining 33%.
Renault-Nissan boss Carlos Ghosn failed to give assurances about Andersson’s future yesterday.
“The rumours are going to continue until (a) board decision to turn the page, which is normal at a certain point in time,” he said at the Geneva auto show. “Management teams come and go.”
Under Andersson, a General Motors veteran, Avtovaz has cut its workforce and other fixed costs and made headway in cleaning up a supplier network once rife with corruption and inefficiency.
But media speculation over his future has been rife since Renault announced a €225mn ($245mn) write-down on its 37% stake last month.
Renault paid $1bn for an initial 25% of Avtovaz in 2008, betting on a Russian auto market that many then expected to eclipse Germany’s within a few years. Six years later, Renault-Nissan invested another $740mn to take control, according to deal terms announced in late 2012.
Last month’s writedown saw Renault slash the value of its 37% stake to just €96mn. It came as Avtovaz reported a net loss of 73.85bn roubles ($999.3mn) for 2015, almost triple the loss it recorded in 2014, and issued a plea for cash to shareholders including Renault.
Andersson has also felt the ire of Rostec CEO Sergei Chemezov, who criticised him late last year over the cutting of almost 20,000 jobs since 2014, saying workers were being “kicked out on the street”.
Rostec declined to comment.
In Geneva, Renault-Nissan boss Ghosn underlined that Andersson’s possible replacement should not be seen as a reflection of the carmaker’s financial performance.
“It’s a tough job and nobody wants to do it forever,” he said. “There’s a certain point in time when your mission is finished and someone has to take (over).”