RENAULT AGREES TO SELL STAKE IN RUSSIAN AUTOMAKER
Deal with Moscow gives automaker the option of resuming business later
The French automaker Renault announced Monday that it was exiting Russia in a deal negotiated with the Russian government that would allow Renault the option of resuming business in the country at a future date.
Under the agreement, Renault will sell its 68 percent stake in AvtoVAZ, Russia’s biggest carmaker, to a Moscow-based automotive research institute known as NAMI. Renault did not disclose the price, but a person with knowledge of the situation, who spoke on condition of anonymity to discuss details not made public, said the automaker was paid the symbolic sum of 1 ruble.
NAMI would continue to operate AvtoVAZ’s two sprawling auto factories and pay its employees. Renault could then repurchase the stake within six years, Renault said in announcing the deal.
“Today, we have taken a difficult but necessary decision, and we are making a responsible choice towards our 45,000 employees in Russia,” said the French automaker’s chief executive, Luca de Meo.
Renault did not immediately
disclose how much it is receiving for the stake. The company said it would take a $2.3 billion financial hit in the first half of the year because of the sale and has sharply lowered its financial outlook for 2022.
Russia is Renault’s second biggest market for cars after France, comprising around 10 percent of global sales.
In 2008, Carlos Ghosn, Renault’s chief executive at the time, agreed to partner with AvtoVAZ with the direct blessing of Putin, who wanted a foreign partner to help improve quality and viewed
Ghosn as the man who could get the job done.
Renault’s partnership with AvtoVAZ added to Ghosn’s hefty salary at the time, drawing scrutiny from some Renault shareholders.
Yet the deal eventually made Renault Russia’s largest automaker, annually rolling 500,000 Ladas and Renault-branded cars off its assembly lines for an increasingly affluent cadre of Russian consumers.
In March, however, Renault announced it was stopping operations at a plant in Moscow and reassessing its partnership with AvtoVAZ, after Western sanctions blocked the import of computer chips and other parts needed for cars. The announcement was made hours after President Volodymyr Zelenskyy of Ukraine, addressing the French Senate, called on Renault and other French multinationals to leave Russia.
Renault had initially tried to keep its Russian factories running, even as Russia bore down on Ukraine, citing the need to continue producing for the local market. In closed-door meetings early in the conflict, French government officials urged top executives to avoid making hasty decisions to leave.
The French state owns a 15 percent stake in Renault and holds a seat on the board. President Emmanuel Macron said during a news conference in March that French companies should be “free to decide for themselves” whether to stay in Russia.
Renault, like other Western firms, also needed to keep paying its employees — especially after Moscow said it would penalize foreign firms that stopped paying workers.
But the Western limits on shipping parts to Russia soon made it impossible to keep operating the two factories.