But although the company's situation has improved, most of its structural problems remain. The AvtoVAZ factory was built under license from FIAT in 1970, and with capacity for production of 740.000 cars, it is the only volume car producer in Russia. Until the beginning of 1990 AvtoVAZ was practically the only supplier of cars to ordinary Russian citizens. Also imported cars have won some market share. These facts make it understandable why AvtoVAZ is often criticized for being slow to modernize its production range.
AvtoVAZ cars are also infamous for their low quality of assembly.
At the beginning of last year the company was experiencing difficulties selling its cars. Inventories were stacking up and the management was forced to decrease planned production by 100,000 units. This situation was in stark contrast to 1997, when the company was working peak capacity producing 740,000 cars per year. The company had to step up production and work longer weeks in two shifts in order to meet the upsurge of demand. During this time, AvtoVAZ also managed to restructure its huge debt to the federal government.