As car manufacturers continue to pause production at Russian sites or tweak trade with the country, Renault is fast becoming the last not to alter its relationship with Russia.
Renault owns a 68 per cent stake in AvtoVAZ which is responsible for Russia’s hugely popular Lada brand. Through this ownership stake, Renault controls approximately 30 per cent of the country’s car market and has a local workforce of 40,000. Making the matter all the more complex is the fact that the French government owns a 15 per cent stake in Renault. Russia accounts for about 10 per cent of Renault’s revenue.
Sources tell Auto News that Renault is reluctant to pull out of Russia due to the high costs involved and is keen to avoid the nationalization of AvtoVAZ.
Read Also: Lada Halts Production In Russia Due To Sanctions Over Ukraine Invasion
The French government has remained tight-lipped about Renault’s ongoing relationship in Russia. French Finance Minister Bruno Le Maire did say that private companies are free to make their own decisions on doing business in Russia, but only if they “strictly and rigorously adhere to sanctions.”
Research firm Alphavalue suggests that there is a “low likelihood” of Renault relinquishing its stake in AvtoVAZ. The firm also downgraded its recommendation on shares, stating that the value of the venture has fallen to zero “to account for the geopolitical risk regarding Russia’s invasion of Ukraine and the long-lasting implications that Western sanctions could have on the Russian economy, possibly drastically reducing car demand in the country for years to come.”
Production at Renault’s assembly plant near Moscow has been temporarily paused until March 18 due to supply issues. AvtoVAZ sites in Togliatti and Izhevsk have also experienced production interruptions following Russia’s invasion of Ukraine due to semiconductor shortages. Evidently, Renault is stuck between a rock and a hard place.
