AGI – Renault announced that will sell its majority stake in Avtovaz to a Russian science institute, adding that the deal, however, includes a six-year option to buy back the stake.
The car manufacturer, which in the West is the one most exposed on the Russian marketexplained that Avtovaz’s 67.69% stake will be sold to the Russian Central Research and Development Institute for Automobile and Engines, known as Nami.
In this direction, all the necessary approvals have been obtained. The 100% stake in Renault Russia will go to the city of Moscow. In a note, the Russian Ministry of Industry and Trade has made it known that Renault’s business in Russia is now owned by the Russian state.
“Today we made a difficult but necessary decision, and we are making a responsible choice for our 45,000 employees in Russia,” said CEO Luca de Meo. The move preserved the group, leaving open the possibility of returning to the country in the futurein a different context, explained the manager.
In March, Renault said it would suspend operations at its plant in Russia due to the growing pressure triggered by the conflict in Ukraine.
The company, 15% owned by the French state, confirmed a “non-cash” write-down of nearly € 2.2 billion, to reflect the potential costs of a suspension of operations in Russia. More than 400 companies have withdrawn from the country after the invasion of Ukraine which began on February 24leaving behind billions of dollars of assets.
The exit from Russia will cost 10% of the turnover
The exit from Russia will cost Renault around 10% of turnover. In the first quarter, the French company had recorded total revenues in the country of approximately 900 million euros, 527 million from its 67.69% stake in Avtovaz and 367 million from Renault Russia, which owned the large plant on the outskirts of Moscow where Dacia Duster, Renault Kaptur, Renault Arkana and Nissan Terrano were produced, for a total of approximately 95,000 vehicles.
AvtoVaz, founded in 1966 in the historic former Fiat factory in Togliatti, instead produces and exports around 400,000 vehicles per year. In the huge plant, Lada branded models are produced for which a sort of mechanical “fusion” with Dacia was planned, with the use of platforms and technologies of the low cost brand of the Renault Group. The plant, according to data updated at the end of 2020, employs over 35,000 people including production workers, technicians and administrative staff.
The assembly lines for vehicles, bodies, chassis, engines and transmissions have a total development of 300 km and are supplied by an impressive foundry that annually processes over 100,000 tons of steel and aluminum. Renault has invested around € 2 billion over the past decade in its Russian operationsincluding the upgrading of the huge factory in Togliatti.
Russia was the second largest world market for the Renault group after Europewith nearly 500,000 vehicles sold in 2021, but the presence of the Lozenge house in the country had been questioned since the start of the Russian offensive in Ukraine.
The French group was also facing logistical problems due to a shortage of imported components due to Western sanctions. In April, Avtovaz had to send its employees on paid leave for three weeks, blocking most of the production.