Renault offloads AvtoVAZ

RENAULT will transfer its 68 per cent stake Russian AvtoVAZ to the country’s science institute for the symbolic price of one rouble ($A0.019).

 

Russian companies have been purchasing Western companies at bargain prices since its invasion of Ukraine in February, the Russian trade ministry saying Renault’s Moscow factory, which produces Renault and Nissan models, would also be passed to the city’s government.

 

According to a report published in Automotive News Europe, Renault, and the French government – which owns a 15 per cent stake in Renault – both declined to comment on the deal, which was first reported by Russian news agencies citing the country’s trade minister, Denis Manturov.

 

Mr Manturov said Renault “decided to transfer its stake in AvtoVAZ”, which owns the Lada brand, the NAMI (Russia’s central research and development automobile and engine institute) “because it lacked the ability to keep its Russian operations going”.

 

According to the Russian trade minister, Renault would have the right to buy back its stake in AvtoVAZ within five to years but suggested it would cost the company considerably more than one rouble.

 

“If during this period we make investments, then that will be taken into account when it comes to the cost. There won’t be any presents here,” said Mr Manturov.

 

Automotive News Europe says Renault is the “most exposed” Western vehicle manufacturer in the Russian market. The company said last month it would suspend operations at its Moscow plant amid mounting pressure over its continued presence in the country following Russia’s invasion of Ukraine.

 

Renault builds three models based on the Dacia Duster platform at its Moscow plant, while AvtoVAZ builds Ladas, Russia’s top-selling brand with approximately 22 per cent of the market.

 

The French company received about 10 per cent of its revenue from Russia last year and said last month it was considering a 2.2 billion euro ($A3.26b) non-cash write-down to reflect the potential costs of suspending operations in Russia.

 

Renault first acquired a 25 per cent share in AvtoVAZ back in 2008 at a cost of more than $US1 billion ($A1.41b) and gradually increased its stake, consolidating the company into its balance sheet in 2017. 

 

It has invested significantly in modernising both the production plant, in the city of Togliatti, and in updating Lada’s antiquated model range.

 

According to the Yale School of Management, more than 750 companies have announced that they will curtail their operations in Russia to date. Russia has said it will consider repatriation of assets of foreign companies that shut down operations after the invasion.