The French carmaker is suspending industrial activities in Russia.
(Photo: imago images / ITAR-TASS)
Boulogne Billancourt Because of the war in Ukraine, Renault is pulling the ripcord on its Russian business. The French carmaker announced on Wednesday evening that it would suspend its “industrial activities” in the country with immediate effect. In addition, “all possible options” would be examined with a view to Renault’s participation in the Russian manufacturer Avtovaz with the Lada brand.
Russia is an important and above all profitable market for the Renault Group. The decision is therefore a setback for boss Luca de Meo’s restructuring course, which had recently shown initial success. The group has now lowered its forecast for the operating margin in the current year from at least four to around three percent.
In addition, Renault prepared investors in its statement to write off the Russian business worth 2.2 billion euros. Citigroup analyst Gabriel Adler wrote in an analysis that the automaker’s shares are likely to be headed lower for the foreseeable future “given the magnitude of the revenue shortfalls and the impact on assets.”
Among other things, Renault produced the SUV model Captur at its location near Moscow. The French also have a 68 percent stake in Avtovaz, which operates a plant in Tolyatti in southern Russia. The other 32 percent belongs to the Russian arms and industrial conglomerate Rostec, which is run by a confidante of Vladimir Putin.
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During the early stages of Russia’s war of aggression against Ukraine, Renault temporarily shut down production at its Russian plants. The reason given at the time was “interruptions in the supply of components”. The carmaker then resumed production.
The Russian market accounted for nearly a fifth of Renault Group car sales last year. The company has more than 40,000 employees in Russia. It is not for nothing that the group hesitated for a long time to discontinue its Russian business – and reaped angry protests from Ukraine. The Ukrainian Foreign Minister Dmytro Kuleba even called for a boycott of the group.
In the past few days, the pressure on Renault to withdraw from the Russian market had increased. The issue was also sensitive for the government in Paris: the French state has a 15 percent stake in Renault – and at the same time is calling for tough action against Putin on the international stage.
When the Ukrainian head of state, Volodymyr Zelenskiy, recently spoke via video link in front of the parliament in Paris, he demanded: “French companies must leave the Russian market.” He also expressly mentioned Renault. The companies should no longer be “sponsors of the Russian war machine”. Values are more important than profits.
Shortly before the war began in February, Renault had presented positive figures for the past year. The group made a profit of 888 million euros in 2021 after making a record loss of eight billion euros in the previous year and having to be rescued with an emergency loan from the government in Paris.
De Meo took over the management of Renault in the summer of 2020 at the height of the severe crisis. Its future program, titled “Renaulution,” which combines hard-hitting cost-cutting with a focus on a higher-priced product range and electric cars, is now facing strong headwinds from the effects of the Ukraine war.
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