AvtoVAZ Seeks Cure for Corrupt Suppliers

Lada maker OAO AvtoVAZ is demanding complete cost transparency from suppliers as it seeks to cut spending on purchased parts 2% this year, Reuters reports.

AvtoVAZ, which is now controlled by the Renault-Nissan alliance, tells reporters in Russia it may bring production of seats and some metal stampings in-house to avoid continuing to do business with corrupt suppliers.

Chief Financial Officer Evgeny Belinin estimates 15%-20% of the company's current purchases involve rigged prices. Many are in the form of multiple bids secretly submitted by the same organization.

AvtoVAZ spends about 140 billion rubles ($3.8 billion), or 56% of revenue, on purchased parts. But it says it has been forced to pay as much as twice the global price for certain sole-sourced components to avoid production disruption.