The position of Renault and its main shareholder, the French State, was difficult to maintain. How to maintain its activities in Russia, a country which “flouts international law” as Emmanuel Macron said yesterday in aa video broadcast during the first European Humanitarian Forum, while the authorities of the attacked country, Ukraine, accuse you, through the voice of its president, of being “the Russian war machine” and call for a “boycott” of your products everywhere in the world? Difficult, even if other private companies, such as TotalEnergies and Leroy Merlin have explained that a withdrawal would open the door to expropriation.
Wednesday evening, after a board meeting, Renault announced the suspension of activities at the Renault factory in Moscow and the possibility of selling its stake in AvtoVAZ, the Russian car manufacturer. Measures that push the group’s management to revise its financial outlook downwards, aiming for an operating margin no longer greater than 4% as initially planned, but around 3%.
Call for boycott
The announcement comes as the French automotive group was cited by the Ukrainian president during his speech to French deputies. In a videoconference transmitted live to the National Assembly, Volodymyr Zelensky urged French companies “to stop being sponsors of the Russian war machine”. And to quote Renault, among Leroy Merlin and Auchan. “French companies must stop financing the murder of women’s children, rapes”, launched the Ukrainian president besieged by Russian troops in kyiv, the country’s capital. “Everyone must remember that values are worth more than profits,” he insisted relentlessly as French companies dithered in the face of the economic stakes of abandoning the Russian market. A few hours later, the head of Ukrainian diplomacy Dmytro Kouleba outright called for a global “boycott” of the French car manufacturer because of “its refusal to leave Russia”.
Dmytro Kouleba accused in a tweet Renault, of which Russia is the second largest market, of “supporting a brutal war of aggression”. He therefore calls on “customers and companies around the world to boycott the Renault group”.
More than a Leroy Merlin or an Auchan, Renault’s position on Russia is more and more complicated to maintain, by virtue of the status of its first shareholder, which is none other than the French State (15% of the capital) and which is largely involved in the sanctions taken against Moscow.
A nightmare for Renault
At Renault, the scenario of a withdrawal from Russia therefore takes on the appearance of a nightmare with considerable losses, but also with the fear of never returning to this market. The cost of a departure would simply be colossal. The French car manufacturer took control of Avtovaz (the manufacturer of Lada) in the early 2010s and invested several billion euros in it to modernize the industrial tool and develop a new range of models. If the turnover is still limited (3 billion for Avtovaz alone, that is to say without the sales of the Renault brand), Russia is however one of the markets where Renault was betting the most for its internationalization. The diamond brand was also preparing to launch a new range accompanied by a new strategy more focused on profits than volumes. With 500,000 cars sold, Russia was already Renault’s second largest market, behind France.