Renault cannot leave Russia: what the French manufacturer fears

As carmakers continue to cut production at Russian factories or change trade with the country, Renault is fast becoming the last manufacturer not to change its relationship with the Russian Federation.

Renault owns a 68% stake in AvtoVAZ, which is responsible for Russia’s hugely popular Lada brand. Through this participation, Renault controls approximately 30% of the country’s car market and has a local workforce of 40,000 people. The even more complex issue is that the French government owns a 15 percent stake in Renault. Russia accounts for about 10% of Renault’s revenue.

Renault is reluctant to withdraw from Russia due to the high costs involved and is keen to avoid nationalizing AvtoVAZ.

The French company is caught between a hammer and an anvil

The French government has not commented on Renault’s ongoing relationship with Russia. French Finance Minister Bruno Le Maire said private companies were free to make their own decisions about doing business in Russia, but only if they “strictly and rigorously adhere to sanctions.”

The research firm Alphavalue suggests that there is a “low probability” that Renault will drop its stake in AvtoVAZ. The company also downgraded its action recommendation, saying the value of the action had been reduced to zero “to take into account the geopolitical risk of Russia’s invasion of Ukraine and the long-term implications of Western sanctions.” on the Russian economy, including reduced demand for cars in the country for years to come. “

Production at the Renault assembly plant near Moscow was temporarily suspended until March 18 due to supply problems. The AvtoVAZ plants in Togliatti and Izhevsk also suffered production disruptions following Russia’s invasion of Ukraine due to a shortage of semiconductors. Obviously, solving Renault is not easy.