© Evgenia Novozhenina
In a factory in Moscow, in 2019.
The position of the leading car manufacturer in Russia is increasingly difficult to hold for Renault. The manufacturer is present there today under the Renault brand with a factory located in Moscow which produces 100,000 vehicles per year (Duster, Captur) and employs 1,800 people. This unit is expected to close tonight and there is no scheduled reopening date. The subject is much more complex for the other subsidiary of Renault: Avtovaz. At first glance, this name does not say much, but it is quite simply the Lada brand with 400,000 cars produced each year and a 21% market share. Renault entered the capital of this company in 2008 and today controls 68% of the capital alongside the Russian public conglomerate Rostec. The two Lada factories located south of Moscow employ no less than 40,000 people.
However, according to information from Release, these two factories will also stop for a period of three weeks from April 4th. Officially, the teams will take their summer holidays early in order to cope with the lack of spare parts and semiconductors that Russia can no longer import. Unofficially, Renault’s position in Russia is less and less tenable. Especially since the reference shareholder of the diamond firm is the French State (up to 15%), which, like the other members of the EU, implements the economic sanctions decided by mutual agreement. in Brussels. It is difficult on the one hand to boycott economic exchanges with Russia and on the other to be present in the capital of a leading industrial company.
values or profits
Renault is therefore seriously thinking regarding the best way to get rid of what looks more and more like a big thorn in the side. The stake in Avtovaz is recorded in its accounts for a value of 3.1 billion euros. If Renault is forced to separate from this subsidiary, the decision will come financially at the worst possible time. So far, the diamond firm has invested heavily to modernize the production tool and straighten the accounts. The first profits were only beginning to appear with an operating margin of 247 million euros in 2021. In addition, Russia has become, over the years, one of Renault’s first markets outside of Europe. The group is present neither in the United States nor in Asia, the preserves of its partner Nissan. Apart from Russia, it only has South America as an international outlet.
The question of the future of Renault in Russia is in any case on the agenda of a board of directors which was to be held this Wednesday evening. It is more than likely that each of the 17 administrators of the group will have in mind the request supported de Volodymyr Zelensky a few hours earlier before the Senate and the National Assembly: “French companies must leave the Russian market. Renault, Auchan, Leroy Merlin and others must stop sponsoring Russia’s war machine.” Before the President of Ukraine concludes: “All businesses must remember once and for all that values are worth more than profits.” This Wednesday evening, the head of Ukrainian diplomacy, Dmytro Kulebae, also accused in a tweet the French manufacturer of “to support a brutal war of aggression”. He called “customers and businesses around the world to boycott the group.”
