Taganrog Automobile Plant (TagAZ): From Daewoo Licence to Bankruptcy

TagAZ history at a glance: key dates

Doninvest and the Daewoo plan (1997–1998)

TagAZ grew out of the Doninvest financial and industrial group, founded around Doninvest Bank in 1991 by the businessman Mikhail Paramonov. Doninvest had already assembled Daewoo cars at the Krasny Aksay plant from 1995, starting with the Nexia and Espero. In 1997 that plant built 13,200 vehicles. The next step was a large new factory designed to build Daewoo models under licence.

Construction began in spring 1997, fully financed by Doninvest. The investment exceeded 260 million US dollars, about €230 million at the 1997 rate. According to the old 1cars text, the plant stood on the site of a former combine-harvester factory, and its opening ceremony took place in mid-September 1998.

The plan was to build Daewoo designs under Doninvest names: the Assol, based on the Daewoo Lanos, and the Orion, based on the Nubira. The larger Kondor, a Leganza derivative, was built at the Krasny Aksay plant. Pilot semi-knocked-down assembly of the Lanos and Nubira began in 1998.

A difficult start: the 1998 crisis and Daewoo's collapse

The timing was poor. About a month before the opening, the financial crisis of August 1998 cut demand for new cars and made imported kits far more expensive. The plant was mothballed almost immediately after the ceremony and assembled cars only occasionally and in small batches.

The second blow came from Korea. Daewoo Motors ran into financial trouble in 1999 and went bankrupt in 2000, and the supply of components stopped. In the first nine months of 2000, Doninvest built only 34 cars. Official figures show 586 vehicles for 1999 and 298 for 2000.

Citroën Berlingo as the Orion M

Doninvest signed an agreement with Citroën to assemble the first-generation Citroën Berlingo under the name Orion M. Sources disagree on the dates: Wikipedia gives May 1999 for the agreement and 1999 to 2002 or 2003 for production, while the old 1cars text dates the contract to April 2000. Only about 800 to 1,000 Orion M vans and passenger versions were built before the partnership ended in 2003.

The Berlingo did not save the plant, but it showed that TagAZ could work with a foreign partner on contract assembly. That model became the basis of the company's most successful period.

The Hyundai years (2001–2012)

In 2001 TagAZ began assembling the Hyundai Accent of the LC generation. The Accent was simple, cheap to build and in strong demand, and the plant's output rose quickly. According to the old 1cars text, Hyundai's engineers praised the standard of work, and more models followed:

At its peak, the factory could build up to 20 different models at once and was designed for 180,000 vehicles a year across six models. It covered 60,000 m² with a body shop, paint shop, four assembly lines, an electroplating shop and a testing department, and employed about 8,500 people.

Hyundai's interest declined after it opened its own factory in 2010. TagAZ stopped building Hyundai models in spring 2012.

Taganrog Automobile Plant output by year

By our calculation, output grew almost 28 times between 2003 and 2008, and the 2008 total was 34 % more than in 2007. It then fell by 72.5 % in a single year, as the global financial crisis hit demand and credit for car buyers dried up.

Own models and Chinese partners (2008–2013)

From 2008 TagAZ tried to reduce its dependence on Hyundai. It began semi-knocked-down assembly of the Vortex Estina, a rebadged Chery A5, under its own Vortex brand. In October 2010 it added the BYD F3 saloon, the Vortex Corda based on the Chery Amulet and the Vortex Tingo based on the Chery Tiggo.

Two models based on JAC designs followed: the TagAZ C10, a rebadged JAC Tojoy, from June 2011, and the C190, based on the JAC Rein, from October 2011. According to the old 1cars text, the C10 was adapted for harsh road conditions.

TagAZ also sold cars under its own name. The Vega saloon of 2009 was accused of copying the Chevrolet Lacetti; the dispute cost TagAZ its export rights and ended a joint venture with SsangYong. The Tager and Road Partner were rebadged SsangYong Korando and Musso off-roaders, and the Master was a diesel light truck. The old 1cars text adds a school bus based on the Hyundai County. The last new model, the coupé-styled TagAZ Aquila, went on sale in 2013.

Debts, bankruptcy and the end of production

The 2008 crisis left TagAZ with heavy debts. In 2010 a lending bank filed a bankruptcy claim against the company; according to the old 1cars text, the claim was later withdrawn. The same text says TagAZ bought land for a third production site that year, with planned investment of more than €24.4 million, but the project did not go ahead.

In spring 2012, with sales falling and staff being cut, TagAZ itself applied to be declared bankrupt. A court declared the company bankrupt on 21 January 2014, and Doninvest Bank collapsed later that year. The old 1cars text reports that a new investor planned to restart the assembly of small trucks, buses and special vehicles for disabled passengers. We found no reliable source confirming that series production resumed.

Our take on the TagAZ story

TagAZ is a typical example of a plant built on contract assembly. It grew fast while a strong partner supplied designs and kits, and it struggled once that partner left. Its own models arrived too late and in too small numbers to replace the Hyundai volume.

To compare the size and data of models the automobile plant assembled, such as the Hyundai Accent and the Vortex Corda, use the 1cars comparison tool. For the wider story of the Korean company behind its first models, read the history of Daewoo, and all TagAZ models are listed on the TagAZ brand page.