June 26, 2022

Wire Service Canada

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Russia nationalized Renault’s factories

AGI – Renault announced that It will sell its largest stake in Avtovaz to a Russian science institute, adding that the deal, however, includes a six-year option to buy back the stake.

Car manufacturer, which is in the West The most exposed in the Russian marketexplained that Avtovaz’s 67.69% stake will be sold to the Russian Central Research and Development Institute for Automobiles and Engines, known as Nami.

In this direction, all necessary approvals were obtained. The 100% stake in Renault Russia will go to Moscow. In a note, the Russian Ministry of Industry and Trade announced that Renault’s operations in Russia are now owned by the Russian state.

“Today we made a difficult but necessary decision, and we are making a responsible choice for our 45,000 employees in Russia,” said CEO Luca de Meo. This move preserved the group, Leave the door open to the possibility of returning to the country in the futurein a different context, explained the director.

In March, Renault said it would suspend operations at its plant in Russia due to Increasing pressure caused by the conflict in Ukraine.

The company, which is 15% owned by the French state, confirmed a “non-cash” write-off of nearly 2.2 billion euros, to reflect the potential costs of suspending operations in Russia. More than 400 companies withdrew from the country after the invasion of Ukraine, which began on February 24leaving behind billions of dollars in assets.

Exit from Russia will cost 10% of the turnover

Exit from Russia will cost Renault about 10% of the turnover. In the first quarter, the French company recorded total revenue in the country of about 900 million euros, 527 million of its 67.69% stake in Avtovaz and 367 million of Renault Russia, which owns the large plant on the outskirts of Moscow where Dacia Duster Renault Captur, Renault Arkana and Nissan Terrano were produced. A total of about 95,000 cars.

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AvtoVaz . numbers

AvtoVaz was founded in 1966 at the historic former Fiat plant in Togliatti, instead producing and exporting about 400,000 cars annually. In the huge factory, Lada brand models are produced for it Some kind of mechanical “merger” is planned with Dacia, with the use of Renault Group’s low-cost brand platforms and technologies. The plant, according to data updated at the end of 2020, employs more than 35,000 people including production workers, technicians and administrative staff.

The total development of the assembly lines for vehicles, bodies, chassis, engines and transmissions is 300 km and is provided by an impressive foundry that processes more than 100,000 tons of steel and aluminum annually. Renault has invested nearly €2 billion over the past decade in its Russian operationsincluding the development of the huge factory in Togliatti.

Russia was Renault’s second largest global market after Europewith nearly 500,000 cars sold in 2021, but the presence of Lozenge’s home in the country has been in question since the start of the Russian offensive on Ukraine.

The French group was also facing logistical problems due to a lack of imported components due to Western sanctions. In April, Avtovaz was forced to send its employees on paid leave for three weeks, blocking most production.