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The Wall Street Journal: Production halted at AvtoVAZ factory making Russia’s iconic Lada cars

Lada cars have been a symbol of Russia’s self-reliance since they began rolling off assembly lines during the depths of the Cold War.

On Wednesday, Lada’s factory floors ground to a halt as Western sanctions deprived its parent company of the parts and supplies it needs to make cars, according to people familiar with the matter. Thousands of workers have been placed on leave.

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The disruption shows how Russia’s economy is beginning to feel the bite of sanctions the West imposed on Moscow after Russian President Vladimir Putin decided to invade Ukraine. Russia’s exclusion from the SWIFT interbank payments system has made it hard for Russian companies to transact with suppliers. Supply routes, particularly through Ukraine, are shut and the ruble’s
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devaluation has made paying for parts from outside Russia much more expensive.

Such a stoppage was once unthinkable. During Soviet times, Lada’s parent company AvtoVAZ erected a giant factory on the banks of the Volga River, capable of nurturing a homegrown supply chain.

Today, however, AvtoVAZ is owned by French car maker Renault SA
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and the Togliatti plant relies on a Renault factory in Romania for subassembly and components. More than 20% of AvtoVAZ’s parts — from connectors to key electronics — come from outside Russia, people familiar with the matter said.

An expanded version of this report appears at WSJ.com.

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