Renault Group sells 100 per cent of stake in Russia operation

UPDATE, May 17: Renault sells stake in Russian arm and AvtoVAZ

The Renault Group has sold its Russian operations as well as its controlling stake in AvtoVAZ, the company has announced.

On Monday, the Group's Board of Directors unanimously agreed to sell 100 per cent of its shares in Renault Russia to Moscow City entity and also its 67.69 per cent interest in AvtoVAZ, the parent company to Lada, to the Central Research and Development Automobile and Engine Institute (NAMI).

However, the agreement has a caveat that the Renault Group can buy back its interest in AvtoVAZ at certain points during the next six years if it wishes to do so.

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"Today, we have taken a difficult but necessary decision; and we are making a responsible choice towards our 45,000 employees in Russia, while preserving the Group's performance and our ability to return to the country in the future, in a different context," said Luca de Meo, CEO Renault Group.

"I am confident in the Renault Group's ability to further accelerate its transformation and exceed its mid-term targets."

March 7: Renault takes financial hit over links to Russia

A historic deal with Russia is causing big financial issues for Renault – with the French carmarker unable to pull out of its second-biggest market.

The economic sanctions imposed on Russia, and businesses which operate in the country as a result of its war on Ukraine, have had a major impact on Renault's share prices, falling to €22.38 at market close on March 4 from €36.33 on February 18 – its lowest level since the global pandemic began in March 2020.

According to Automotive News Europe, Russia accounted for €5 billion (AU$7.36bn) of Renault's revenue in 2021, with €315 million (AU$463.61m) of operating profits potentially at risk due to the situation.

In 2007, Renault CEO Carlos Ghosn made a US$1 billion (AU$1.36bn) deal with Vladimir Putin to take a 25 per cent stake in AvtoVAZ – makers of Lada – which has now increased to a majority stake of more than 67 per cent, allowing the French marque to attribute 12 per cent of its overall revenue to the Russian market alone.

Ghosn – currently residing in his native Lebanon after escaping Japan while facing major misconduct charges – said the deal made sense at the time, but Renault's lack of transparency is a surprise.

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"When we decided to move into Russia and make this alliance with AvtoVAZ everything was fine," Ghosn said in an interview with Bloomberg TV. "It made a lot of sense.

"I'm stunned by the fact that it's complete silence," he said of Renault's response to the current situation.

The past week has seen numerous automotive manufacturers announce their intentions to leave Russia amid the ongoing conflict with Ukraine, either halting new car sales or production in the country.

They include; Volkswagen, Porsche, Bentley, Nissan, Honda, Mazda, Toyota, BMW, Ford, General Motors, Volvo, and Jaguar Land Rover.