The group’s activities in Russia had already been suspended for a few weeks, the withdrawal is now official. In a press release on Monday May 16, the French car manufacturer Renault announced that it was selling its Russian assets to the Russian state. Concretely, Renault sells its stake in the group AvtoVAZ, which manufactures Lada brand cars, to a state institute in the country.
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The announcement is not really a surprise. Nor is it really good news for Renault. The manufacturer had long relied on Russia, its second largest market after Europe, with nearly 500,000 vehicles sold last year.
The announcement is, however, widely anticipated. Concretely, Renault had provisioned 2.2 billion euros in its accounts at the end of March, i.e. the estimated value of its stake in AvtoVAZ, from which he expected no compensation. According to our information, the transfer agreement finally concluded with the Russian authorities is also for a symbolic ruble. With, however, a clause favorable to the French group: Renault retains the possibility of regaining control ofAvtoVAZ for six years, in 2028, if the context is more favorable to a return in the months or years to come.
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In the meantime, the manufacturer limits the case. The group’s factories in Russia were already shut down for lack of parts, and compensating its 45,000 employees on site cost it tens of millions of euros each month. “It’s a pretty good deal given the circumstances.“, therefore wants to believe an actor in the file, close to the French manufacturer.
However, Renault seems financially fragile. For a year, its share price has lost 30% on the Paris Stock Exchange. Its total capitalization, that is to say its value as a company, is today less than 7 billion euros. By way of comparison, that of Stellantis, the former PSA allied with Fiat, exceeds 45 billion.
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Insufficient total capitalization, in the eyes of many automotive experts, to bear the enormous cost of the sector’s energy revolution as well as the transition to a 100% electric range in Europe by 2030. Hence the project to split its activities between an electrical pole located in France and a thermal pole for petrol and diesel cars.
This will undoubtedly make it possible to raise funds and develop the electricity business as planned. Knowing that Renault has already launched the construction of giga factories, mega factories, batteries, especially in Douai, in the North. By seeking to reduce the manufacturing costs of its cars as much as possible and to increase its margins.