Posted in: 16/05/2022 – 15:05
Affected by Western sanctions imposed on Russia, the French car company Renault, the leader in Russia, which acquired the Lada brand, announced Monday that it will sell its assets to the Russian state, in the first massive nationalization since Moscow’s attack on Ukraine.
The group said in a statement that it had sold its largest stake (67.69%) in the “AutoVAZ” group, the main in the Russian auto industry along with the Lada brand, to the Russian Institute for Research and Development of Automobiles and Engines. At the end of April, Russian Trade Minister Denis Manturov indicated that the deal would be made for “a symbolic ruble”, while Renault did not confirm it until this Monday.
The Russian Ministry confirmed Monday that “agreements have been signed to transfer Russian assets from the Renault Group to the Russian Federation and the Moscow government.” The French automaker also gave up the Renault brand’s own operations in Russia to Moscow, including its plant in the capital that produces Renault and Nissan. The mayor of the Russian capital, Sergei Sobyanin, announced that the plant will re-launch the Soviet brand “Moskovich”, which began production of its cars in 1946 and was known for its simplicity.
“We cannot accept that thousands of workers will lose their jobs,” he said in a statement, stressing that “most of the factory’s workforce and its collaborators will be retained.” The main partner of the Moscow plant will be the Russian truck plant “KAMAZ”, where the production of electric cars is planned. And political analyst Anton Urich considered that trying to produce a new car, starting from scratch, in the absence of foreign technologies and components, is like throwing “billions out of the window.”
Save Lada from bankruptcy
Renault joined AutoVAZ in 2008 to become the majority shareholder in 2014 while Carlos Ghosn led the group. Then the auto giant rescued the troubled Russian group from bankruptcy. This was contributed by the participation of the Russian military-industrial group Rostec. After huge investments and technical involvement with Dacia, Renault’s budget brand, AutoVAZ started making profits. In 2021, Renault sold nearly half a million cars in Russia, the second largest market for the French group after Europe.
The French auto group, which is most involved in Russia and the last to leave, has kept the door open, as it will be able to buy shares in AutoVAZ for six years. “Today we made a difficult but necessary decision,” said group president Renault Luca de Meo, stressing his keenness to act “responsibly towards its 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.”
AutoVAZ manufactures cars, especially at its giant factory in Tolyatti (southwest), which employs 35,000 people. Dacia Logan and Sandero are also marketed under the Renault brand. Most of the factory’s assembly lines stopped after the Russian invasion of Ukraine on February 24. Due to the imposed sanctions, the factory can no longer take delivery of necessary components.
Staff and workers were given three weeks of paid leave in April, shutting down most of his production. The group’s trade union announced again on May 12 the shutdown of production lines between May 16-20, due to a lack of ingredients. Without talking about the process of “nationalization”, Vladimir Putin in March supported the appointment of “foreign” administrators at the head of foreign companies seeking to leave Russia “to pass them on to those who want to make them work.”