In 2001 the total value of goods sold was RR 112,843 million. In
comparable terms, this was a 14.2% increase on the prior year.

Total revenue from vehicle sales in 2001 was RR 93,232 million, up 12.0% from 2000.

In 2001 JSC AVTOVAZ produced 768,030 vehicles, which was 8.1% more than in 2000. Of this number, 753,844 units were produced at the main assembly lines.

The number of vehicles of the VAZ-2110 family produced was 225,431 units, which represents a 28.1% increase on 2000. We produced 395,203 vehicles fitted with the electronic engine control system, a 74% increase on 2000.

The R&D Centre’s special design bureau of rotary engines (Wankel engines) assembled 33 vehicles and the Pilot Production Division assembled 14,119 vehicles.

The average rate of production at main assembly lines was 169.75 vehicles per hour in 2001 as compared with 168.34 units per hour in 2000.

Since early 2001 main production divisions of JSC AVTOVAZ have operated 11 shifts a week. Special working schedules were applicable only to employees who were directly involved in meeting production targets.

This allowed for more rational workload borne by service-division employees and management.

Overall production labour-intensity decreased by 5.3% and work output per employee increased by 4.9% in comparable terms.

The number of vehicles produced per worker increased by 8.9% in 2001 as compared to 2000.

We have almost completed implementation of production in accordance with dealers’ orders. In particular, we have satisfied 96% of orders in terms of models and 86% in terms of colour.

We have produced tools and fittings for a value of RR 963 million, which represents 106.4% of the planned production. Included in this amount are tools and fittings produced for internal consumption for a total of RR 875 million.

Overall output of production equipment at JSC AVTOVAZ was 100.9% of planed output.

In order to prepare for production of new vehicles and modernisation of existing models we have produced RR 291 million worth of equipment and another RR 178 million worth of equipment was produced for replenishment of existing production capacity.

In 2001 we produced RR 2,437 million worth of spare parts, a 13.6% decrease as compared to 2000. This was caused by a significant increase in the production of automotive assembly kits from 53,866 units in 2000 to 115,540 units in 2001.

Production capacity utilisation

Annual vehicle production capacity in 2001 was 730,000 units and has remained unchanged from 2000. This is a result of the commissioning of VAZ-2110 capacity for 15 thousand units carried out in parallel with the disposal of VAZ-2106 capacity for the same number of units.

In 2001 the rate of utilisation of automobile production capacity increased to a critical 105% (2000: 97%).

Production equipment utilisation of main production divisions was equal to 1.78 shifts (2000: 1.66 shifts).

Improving production efficiency

In addition to market demand, we also considered production capability and profitability of each model before changing selling prices, the model mix to be produced, the number of units of specific body paint and the number of model variants.

This allowed us to stabilise the vehicle cost structure during the year.

In 2001 the mix of vehicles produced changed. A larger number of modern VAZ-2110 vehicles were shipped. In addition, we produced more vehicles of the VAZ-2115 model.

Our ongoing efforts to increase the production output of modern and attractive vehicles will enable us to retain our position in the Russian automobile market in case of Russia’s accession to the WTO.

As a result of the constraints on production capacity in the main plant, we have changed our assembly operations. We are currently increasing output capacity by creating assembly operations in other parts of Russia, CIS and foreign countries. As part of such projects we transfer technology and ship automotive assembly kits.

In view of continued lack of vehicle production capacity in our main plant we have increased the output of automotive assembly kits by identifying efficiencies in other divisions.

We believe that our efforts to establish assembly plants in Russia and foreign countries will enable us to satisfy demand of LADA vehicles in 2002, and beyond.

We understand that a modern management system should be built on modern information technology. JSC AVTOVAZ pays significant attention to developing its information system.

In 2001 the information system of JSC AVTOVAZ was developed with a focus on higher requirements of
quality and prompt availability of information used by executives and divisions for managing in times of reform.

We are currently upgrading our management information system.

Implementation of a system that will capture and accumulate external marketing information is under way. This is important for market research, and supporting decisions about sales volumes, terms and selling prices. Customer orders are collected and processed, production and shipment orders are prepared, and sales of vehicles by distributors and dealers are monitored interactively. In addition, we continued to implement a system that monitors the status of suppliers’ shipments to the automobile manufacturing operation. This is built on e-procurement principles.

Each day we review the variances in utilisation of materials in production. The information system enables us to generate reports for review of monthly variances in operational and accounting data, with cumulative amounts from the beginning of the quarter and year.

In order to reduce the design-to-production phase, we are developing and implementing an information
system of design and technical research together with planning and co-ordinating production preparation.

Daily processing of the data in the automobile production area was implemented based on new technology, which reduced the time to generate and issue reports. In 2001 we continued working on the capability to identify and track goods in the production cycle.

We have completed the deployment of real-time records of defects.

We believe the prime objective of developing information systems for the near term is building a unified system of planning and control at JSC AVTOVAZ, together with the capability to monitor business units’ budgets.