Snapshot
- Renault ownership of AvtoVAZ preventing it from leaving Russia
- Share prices fall to lowest post-pandemic levels
- Over a dozen manufacturers have already paused Russian operations
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.
AvtoVAZ plant in Togliatti, Russia
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.
“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.
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Keyword: Renault stuck in Russia thanks to US$1 billion deal