The end of the controversy for Renault: what is happening with AvtoVAZ

Renault will have the right to repurchase the stake in the manufacturer Lada, but possibly at a higher price.

Renault will transfer its 68% stake in Russia’s largest carmaker, AvtoVAZ, to a car research institute for the symbolic price of a ruble, Russian media reported, the latest example of local bargaining institutions over time what western companies are running away from.

The Ministry of Commerce also said that the Renault plant in Moscow, which produces cars under the Renault and Nissan brands, will be handed over to the city government, another sign of what the Russian authorities intend to do with Western assets.

Renault has decided to transfer its stake in AvtoVAZ, which owns the Lada brand, to NAMI because it did not have the capacity to maintain its operations in Russia, the Ministry of Commerce said.

Renault has the right to redeem its AvtoVAZ stake within five to six years of NAMI, an institute founded more than a century ago behind the design and construction of Russian cars and trucks, including limousines used by President Vladimir Little bit.

An interesting business

Manturov suggested that Renault would have to pay more than a ruble to buy back the deal.

“If we make investments during this period, then this will be taken into account when it comes to costs. There will be no gifts here, “Manturov was quoted as saying by Interfax.

Renault is the Western car manufacturer most exposed to the Russian market. The company said it would suspend operations at the Moscow plant amid growing pressure on its continued presence there after Russia’s invasion of Ukraine.

Renault is building three models on the Dacia Duster platform at the Moscow plant.

AvtoVAZ builds Lada, Russia’s best-selling brand, in its own factories and owns about 22% of the local market.

Last month, Renault said it was considering a € 2.2 billion cut to reflect the potential costs of suspending operations in Russia. The carmaker made about 10% of its revenue in Russia last year.

Renault first acquired a 25 percent stake in AvtoVAZ in 2008 at a cost of more than $ 1 billion and gradually expanded its stake, fully consolidating AvtoVAZ in its balance sheet in 2017. It has invested heavily to modernized the huge Togliatti factory and updated the range of models offered by Lada.

Russia has said it will consider repatriating the assets of foreign companies that ceased operations after the invasion.