Well, yes. Only hours after Ukrainian President Volodymyr Zelenskyj (48) left the French carmaker Renault had accused indirectly Russia To finance the war against his country, the company decided to withdraw. The company announced late Wednesday evening that it would stop production in Russia. The Russian authorities are now examining what will happen to the Renault plant in Moscow after the withdrawal. The Kremlin had announced that it wanted to expropriate Western companies that were leaving the country as a result of the war.
Renault is the western car group with the strongest presence in Russia – and could now become the first prominent victim of an expropriation. Last year, the French sold more than half a million cars in the country, primarily through their subsidiary Avtovaz. In addition to its own factory in Moscow – where the Duster, Kaptur and Arkana models as well as the Nissan Terrano are built – most of them came from the two additional Avtovaz factories. Renault holds 69 percent of the Lada mother company, the rest of the state-owned high-tech and armaments group Rostec. Renault boss Luca De Meo (54) was able to report annual sales of around 2.8 billion euros for Avtovaz.
Financially, Renault threatens a disaster with the withdrawal. Since mid-February, the group’s stock market value had fallen by almost 40 percent to just 6.8 billion euros. The company is now considering writing off assets in Russia worth EUR 2.2 billion in the first half of the year. This corresponds to about a third of the remaining value. However, Renault did not give any details about the organization of the withdrawal.
Most recently, many large corporations had withdrawn from the country because of the war, and there are already more than 400 in all bp, Nike, McDonald’s, Apple, Obi or Adidas. The German automaker Mercedes, bmw and Volkswagen have stopped their production in the country. Renault, on the other hand, had hesitated for a long time and only started up the assembly lines in the factories again a few days ago after bottlenecks arose due to delivery problems. But the pressure had become too great.
The French state, which owns a 15 percent stake in Renault, did not enforce the decision to halt Moscow operations, a government spokesman said on Thursday. However, an insider told Reuters that the state’s two representatives on the board supported the decision. Despite the possible consequences.
The Russian government is threatening western companies with expropriation of their assets if they leave the country. Tengelman-Owner Christian Haub (57), for example, firmly expects that the 27 branches of the subsidiary Obi will be taken over by the state. Mercedes had declared that assets worth two billion euros could be nationalized. The Renault factory near Moscow could now be the first major case. Russia’s Industry and Trade Ministry said Thursday it was in talks about the future of the plant and what to do with it. One is in constant contact with the management, said a spokesman. A decision is expected by the end of next week.
It is unclear how things will continue with the subsidiary Avtovaz. The French group could not bring itself to give up its shares. However, the company said it would review options for a majority stake. You also have to take the approximately 45,000 employees into consideration. The production lines are currently at a standstill due to parts shortages. Next week, production is supposed to be partially resumed, but everything should come to a standstill again in April: Avtovas is bringing forward the company holidays. Everything is being done to save jobs, the joint venture said on Thursday. In the future, they want to build Lada cars on their own, without foreign parts. So far, about a fifth of the installed parts and raw materials have been imported.
For Renault boss De Meo, the cut in Russia is also a strategic setback. A key part of his turnaround strategy involved merging the budget brands Dacia and Lada into a single business unit. Lada vehicles were to be built on the Dacia vehicle platform; Dacia would also have benefited from the economies of scale. De Meo wanted to break into the affordable family vehicle segment. The group has already cut its profit forecast for 2022 as a result of the withdrawal: Renault expects an operating margin of only 3 percent.
Nevertheless, the withdrawal was the right step, explained the analysts of the CreditSuisse. An exit from Russia is the better option than waiting – even if this is expensive for the company.