Renault is reportedly selling its majority ownership in Avtovaz (AVAZI p.MM) to a Russian science institute for one rouble, with a six-year option to buy it back, leaving the door open for the French automaker to return.
To save thousands of jobs, Moscow Mayor Sergei Sobyanin announced that Renault’s plant in the city would be utilised to relaunch manufacture of the Soviet-era Moskvich brand.
Renault, the most exposed Western manufacturer to the Russian market, announced on Monday that it would sell its approximately 67.69 percent stake in Avtovaz to the Russian Central Research and Development Automobile and Engine Institute, or Nami.
“The closing of these transactions is not subject to any conditions, and all required approvals have been obtained,” it added.
Renault Russia and the Avtovaz share were sold for a symbolic one rouble each, according to two persons familiar with the issue. The city of Moscow will receive its whole stake in Renault Russia.
Last year, Renault’s Russian assets were valued at 2.2 billion euros ($2.29 billion).
“Today, we have taken a difficult but necessary decision, and we are making a responsible choice towards our 45,000 employees in Russia,” the carmaker’s CEO Luca de Meo said.
He went on to say that the relocation safeguarded the group’s performance as well as their opportunity to return to the country in the future in a different setting.
De Meo has made it plain that the French automaker wants to return to Russia once the Ukraine conflict is finished and regular ties are restored.
Moskvich, which means “native of Moscow,” has been out of production for nearly two decades.
Mayor Sobyanin, on the other hand, said Moscow was working with truck manufacturer Kamaz Inc and Russia’s industry and commerce ministry to keep as much vehicle component manufacturing in Russia as feasible.
Renault announced in March that it would shut down its Moscow facility due to rising pressure over its presence there since the start of the Ukraine conflict. read
Renault confirmed a non-cash writedown of roughly 2.2 billion to reflect the possible costs of discontinuing Russian operations. Renault is controlled by the French government to the tune of 15 per cent.
Since Russia invaded Ukraine on February 24, more than 400 enterprises have left the country, leaving behind assets worth billions of dollars.
Russia refers to its efforts as a “special operation” aimed at disarming Ukraine and defending it against fascists. The accusations of fascism are unfounded, according to Ukraine and the West, and the war is an unprovoked act of aggression.
(Adapted from USNews.com)