PARIS, France – Renault‘s Russian partner Avtovaz will go it alone without foreign-made car parts, it said on Thursday, March 24, as Russian authorities consider what to do with the French carmaker’s Moscow plant after its exit from the country.
Shares in Renault were down 2% in early afternoon trade after it became the latest international company to distance itself from Russian partners over the invasion of Ukraine.
The Western carmaker with the greatest exposure to the Russian market said on Wednesday, March 23, that it was considering taking a 2.2-billion-euro ($2.42-billion) non-cash charge in the first half to write off its assets in Russia.
Avtovaz said on Thursday that it would manufacture new models without relying on imported components and would work to rebuild its supply chains.
Russia’s Ministry of Industry and Trade on Thursday said it would decide by the end of next week how to use Renault’s plant in Moscow after the carmaker said it was suspending operations there.
The government’s comments about the future of the factory come after the Kremlin suggested it could nationalize assets of foreign companies that leave the country.
A decade ago, major automakers saw Russia as a promising growth market with potential to be among the world’s 10 largest vehicle-buying nations.
The latest sanctions, and earlier measures imposed after Russia’s 2014 annexation of Crimea, have ended that dream.
Premium German carmaker Mercedes-Benz this month said it has 2 billion euros ($2.20 billion) in assets that could be threatened by Russian proposals to nationalize the property of foreign companies that exit the country because of its invasion of Ukraine
Renault said it would also now assess its options regarding its majority stake in Avtovaz, Russia’s No. 1 carmaker.
“We think this strategic move will shift the attention of investors into the core operations of Renault, which have been largely restructured over the past years,” JP Morgan analysts said in a note.
Credit Suisse analysts said that a Russian exit for Renault would be a better option than a “wait and see” approach, even if it comes at a cost for the company.
The French state, which owns a 15% stake in Renault, was not behind the carmaker’s decision to suspend its Moscow operations, a government spokesman said on Thursday.
Ukrainian President Volodymyr Zelenskiy on Wednesday accused Renault of financing the war. The foreign minister later in the day welcomed Renault’s move. – Rappler.com
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