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Renault leaves Russia over Ukraine invasion

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Renault announced on Monday that disposes of its assets in Russia and sells both its Russian subsidiary to the Moscow City Council and its majority stake in the automaker Avtovaz to a Russian state body, although the right of repurchase is reserved for the next six years.

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This possibility of regaining control of Avtovaz, where it had 67.69% of the capital, and which is now in the hands of the Central Institute for Research and Development of Automobiles and Motors (NAMI), is contemplated “in certain periods” during those six years in the assignment agreement.

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The French automobile group noted in a statement that, as it had advanced on March 23 when suspended its activities in Russia -which was its second largest market after France- that it will include in its accounts an adjustment corresponding to the value of those assets.

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As of December 31, 2021, these assets were valued at 2,195 million euros. In July, when the results of the first semester are presented, the figure of the value adjusted to the date of the transfer will be known.

For Renault, getting rid of Avtovaz now, for a price that the company has wanted to keep confidential -although it assures that it is not 0-, is a financial relief to the extent that it ceases to be a continuous financial drain, since in recent weeks it has been paying its 45,000 employees in Russia even though they were not producing anything.

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Now those workers will report to the Moscow City Council in the case of the former Renault Russia and to NAMI – which is part of the structure of the Russian Ministry of Industry – in the case of Avtovaz.

Last year Renault Russia produced 95,000 cars of the Duster and Arkana models essentially aimed at the Russian market and its surrounding countries. From now on, it will no longer be possible to assemble Renault cars at its Moscow facilities.

As far as Avtovaz is concerned, in 2021 it manufactured nearly 400,000 vehiclesbasically with the Lada brand.

The CEO, Luca de Meo, indicated in the statement that they have made “a difficult but necessary decision” and considered the operation “responsible” in the direction of those who are no longer their 45,000 employees in Russia.

De Meo also stressed that they are keeping the option of returning to Russia in the future but “in a different context.”

The CEO made an effort to convey the message that beyond the setback that having to do without what has been his second market represents for his business, he has “confidence” in “Renault’s ability to further accelerate its transformation and overcome its mid-term goals”. (I)

Source: Eluniverso

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