Renault is said to be considering an ownership transfer of its controlling stake in Russia automaker AvtoVAZ as it looks to follow the lead of other companies and leave the country.
Individuals with knowledge of the matter claim that Renault ideally wants to transfer its stake to a local investor, allowing it to cut ties with AvtoVAZ and the Lada brand. Sources state that other options are being considered.
Renault has a 68 per cent controlling stake in AvtoVAZ and Auto News reports that it is unable to sell this stake to Rostec State Corporation, the other key shareholder in the venture, as the latter is currently under sanctions.
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The French car manufacturer revealed that it would suspend industrial activities in Russia last week in response to the invasion of Ukraine. Already, the car manufacturer has ceased operations at its large factory in Moscow. The future of this site has yet to be determined.
Russia is the second-largest market for Renault and in 2021, accounted for approximately 482,300 sales, placing it second behind France with 521,700 sales. Due to Renault’s exposure to the Russian market, S&P Global has retained its negative financial outlook on the company.
“Although Renault is exposed to Russia because of its large operations there, we are more concerned about its capacity to maintain sound performance in light of likely supply disruptions, higher input costs, and reliance on the European auto market, which could be hurt by the Russia-Ukraine conflict,” the information and analytics company said in a recent report, Bloomberg notes.
Renault valued its business in Russia at €2.2 billion ($2.4 billion) at the end of last year. The Lada brand sells Russia’s two best-selling cars and accounts for roughly 22 per cent of the total market, while AvtoVAZ contributed to about 10 per cent of Renault’s total revenue in 2021.
