MercoPress. South Atlantic News Agency

Russia, Europe’s fastest growing car market collapses

The Togliatti plant dates back to Soviet years and was set up by Italy’s Fiat

Russia's largest carmaker, Avtovaz, is to cut up to 27,600 jobs as it tries to cope with the global slump in demand. The job cuts are more than a quarter of the 102,000-strong workforce at Avtovaz, which makes Lada cars.

Russia had the fastest growing car market in Europe until the financial crisis hit demand. The Association of European Businesses expects 1.4 million cars will be sold in Russia this year, down from 3.2 million in 2008.

Avtovaz, part-owned by French car maker Renault, said on Thursday it had agreed with trade union leaders to cut up to 27,600 jobs at the plant on the Volga river where the iconic Lada has been produced since Soviet times.

The carmaker was set up with Italy's Fiat during the Soviet years. It is a key employer in the southern city of Togliatti, which has a population of 700,000.

In April, the company was on the verge of bankruptcy and it was only after Prime Minister Vladimir Putin stepped in with a 20bn ruble (600 million US dollars rescue package that the company survived.

AvtovAZ,also part-owned by state conglomerate Russian Technologies, has halved salaries and reduced the working week at the Togliatti plant.

“The enterprise is working on one shift and at 65% of capacity. Cutting personnel is essential in such a situation” added the Avtovaz release.

Avtovaz said its president, Igor Komarov, met on Wednesday with the company's main trade union. A plan to reduce the workforce to an optimum 75,000 was discussed at the meeting.