Russia to nationalize Renault plant for Moskvich return

Renault Group to sell Renault Russia, controlling stake in AVOTOVAZ

Ever since the start of the Ukraine-Russia conflict, various countries have imposed bans and sanctions against Russia. Some companies even went on to completely sever ties with the nation due to their military operations in Ukraine. Among those are several automakers that pulled out their businesses in Russia.

One of those automakers that recently made the difficult decision is Renault. Just recently, the French automaker announced that they will sell 100% of Renault Group's shares in Renault Russia to the Moscow City entity. Moreover, the company will also sell its 67.69% interest in AVTOMAZ to NAMI, the Central Research and Development Automobile and Engine Institute of Russia.

“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. I am confident in the Renault Group's ability to further accelerate its transformation and exceed its mid-term targets,” said Luca de Meo, CEO of Renault Group.

But just how much did the company have to sell its shares in Renault Russia and its stake in AVTOVAZ? In a report by Reuters, two sources familiar with the matter said that both the shares and stake were sold for a symbolic one rouble (or USD 0.016) each.

Renault also confirmed that a non-cash writedown of EUR 2.195 million has been written in order to reflect the potential costs of suspending operations in the country. These include consolidated intangible assets, property, plant and equipment, and goodwill of the Group in Russia.

As for the Moscow factory and its 45,000 employees, Moscow Mayor Sergei Sobyanin said that in order to preserve thousands of jobs, the Renault plant in the city would be used to restart production of the Soviet-era Moskvich auto brand. On the other hand, the AVTOVAZ factory at Togliatti may produce Renault Duster cars under the Lada brand.

Sobyanin added that Moscow is already working with truck maker Kamaz and Russia's Industry and Trade Ministry to localize as much vehicle component production in the country as possible. Production at the former Renault plant is expected to start later this year while the plant will reportedly be renamed “Moscow Automobile Factory Moskvich”.

With the French automaker selling Renault Russia and its stake at AVTOVAZ, can they still go back after the conflict has been resolved? Yes, they can as Renault has a six-year option of buying it back, leaving the door open for the automaker's return to the country.

We're more curious, however, with Moscow's plan to revive the Moskvich auto brand that has been dead for around two decades. Will we see modern examples of such cars as the 1500 SL? We'll find out once production begins this year.