Renault Negotiates Sale of Russian Subsidiary 'Avtovaz' for Just 1 Ruble

Sale to Russian State Automotive R&D Center... Includes Buyback Option Within 5-6 Years

[Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] French automaker Renault is reportedly negotiating to sell its Russian subsidiary AvtoVAZ to the Russian state-owned automotive research and development center (NAMI) for just 1 ruble, according to the Wall Street Journal on the 27th (local time). Renault wants to sell for 1 ruble but secure a buyback option to revive the business within 5 to 6 years. The plan is to withdraw temporarily due to Russian sanctions but resume selling cars in Russia once the situation improves.

According to Russian Interfax news agency, Denis Manturov, Russia’s Minister of Industry, said there is a very high possibility that Renault’s 68% stake in AvtoVAZ will be transferred to NAMI. Minister Manturov also stated that the stake in Renault’s Moscow factory will be transferred to the Moscow city authorities. He explained that Renault’s Russian operations will not be nationalized but will be held in trust by Russia.

Minister Manturov said, "The acquisition is not part of the Russian government’s plan, and there is no intention to nationalize." However, he added, "If a company lacks the capability to secure necessary parts, the Russian government cannot wait indefinitely," and "Russia will seek alternatives, and this will apply to all automakers who need to make decisions over time."

Russia is a significant market for Renault. As of last year, the Russian market accounted for about 10% of Renault’s sales and half of its operating profit. Renault’s market share in the Russian automotive market approaches 30%.

However, due to the Ukraine war this year, business in Russia has been suspended, and Renault announced plans to write down up to 2.2 billion euros in Russian business assets. Renault currently employs about 40,000 people in Russia and continues to pay their salaries despite the suspension of operations.

NAMI was established in 1918, the year following the Bolshevik Revolution.

RosTech, a Russian state-owned enterprise, owns 32% of AvtoVAZ shares. RosTech’s CEO Sergey Chemezov is one of Putin’s political allies. Chemezov has been subject to U.S. sanctions continuously since Russia’s annexation of Crimea in 2014. AvtoVAZ accounted for 21% of Russia’s automobile production last year and owns the only Russian car brand, Lada.

Even if Russia acquires Renault’s Moscow factory, it is expected to be difficult to operate the plant due to Western sanctions making it hard to secure parts such as semiconductors. According to sources, Renault does not plan to supply parts or provide technology to Russia after selling its stake.

This content was produced with the assistance of AI translation services.