Status: 04/27/2022 15:13
Renault sells its stake in Lada manufacturer Avtovaz for the symbolic price of one ruble. For the French automaker, its involvement in Russia is turning into a financial disaster.
French carmaker Renault will sell its 68% stake in the largest Russian carmaker Avtovaz to the scientific institute NAMI for the symbolic price of one ruble. In addition, the Renault plant in Moscow will be handed over to the city administration, as announced by the Russian Ministry of Commerce. The production lines have been stopped since the end of March.
Renault and Paris do not want to comment
However, Renault has the opportunity to buy back manufacturer Lada Avtovaz within five to six years, the ministry admitted. “But if we make investments during this period, the price will take that into account. There will be no gifts there,” quoted the Interfax news agency as Commerce Minister Denis Manturov.
Weeks ago, Moscow warned that if Western companies withdrew from Russia, they would be expropriated and their patents confiscated. The French automaker and the French government, which owns a 15% stake in Renault, declined to comment.
Minority stakeholder is Putin’s confidant
Groupe Renault acquired a majority stake in Avtovaz in 2016. The state-owned high-tech and weapons company Rostec is on board as a minority shareholder. This is led by Sergey Teschemesov, a confidant of Russian President Vladimir Putin.
For Renault, the engagement with Russia turned out to be a financial disaster. The group stopped operations at its Russian plant last month and announced it was reviewing options for Avtovaz. The goal for the year was for the operating margin to evaporate.
The value of the stock market plummeted
Russia is the Renault Group’s second largest market after Europe. No wonder, since Lada was the market leader last year with 350,000 cars sold. Renault’s latest annual turnover in Russia amounted to 2.8 billion euros. According to Citibank estimates, Renault made 8% of its profits in the country. Since the Russian invasion of Ukraine, the French group’s stock market value has fallen by more than 40 percent to just € 6.5 billion.
Moscow’s invasion of Ukraine on February 24 triggered a mass withdrawal of Western companies from Russia. More than 750 companies have announced that they will at least partially limit operations there, according to the Yale School of Management.