Renault has therefore decided to stop its activities in its Moscow plant. The pressure had become too great. The position had become untenable for the manufacturer, of which the French State is the main shareholder. On Wednesday March 23, Renault was singled out by Volodymyr Zelensky, accused of supporting the Russian war machine. Earlier, the head of Ukrainian diplomacy had also called for a global boycott of the diamond brand.
Renault therefore convened a board of directors last night and decided to temporarily close its factory in Moscow. He also specified that he was looking at how to withdraw from AvtoVAZ, its subsidiary, which produces the Lada brand, a very popular brand in Russia. And this decision is a very hard blow for the French manufacturer.
Russia is an important market for it: it has three factories and employs more than 40,000 people in the country. As a direct consequence, Renault Group revised its financial outlook for 2022 downwards on Wednesday March 23, 2022, revising its margin to 3% against more than 4% anticipated before the conflict.
Leroy Merlin stays for protect its 45,000 employees in Russia
On the other hand, Leroy Merlin, also very present in Russia, chooses to stay. However, the DIY sign was also cited by Zelendsky yesterday before the assembly. But the boss defends himself: closing the 113 Russian stores would be an abandonment, a gift from the company and its assets to Putin. He also claims to want to protect the 45,000 Russian employees. For the moment, Auchan, also named by Zelenski, has not communicated but the group belongs, like Leroy Merlin (and Decathlon too) to the Mulliez family. The strategy is likely to be the same. It remains to be seen, however, whether this position of remaining in Russia will be tenable in the longer term.
Because it is a battle of image in the opinion which is played. It’s the reputation of companies that is at stake. And reputation has become an asset like any other. One bad buzz who can cause you to drop a stock price. It is also the fear of a product boycott. Decathlon, Leroy-Merlin, Danone, Société Générale, or even Total, all these French groups present in Russia know this well. Until then, they justified their maintenance, taking great care to separate the economy from politics, but on Wednesday March 23, the Ukrainian president showed that this border is not so watertight, recalling that the “values matter more than profits.”