PARIS—French auto maker
is in talks with the Russian government about handing over its 68% stake in Russia’s biggest auto maker to a state-backed entity, according to a report in Russian state media.
The French auto maker is expected to sell its stake in AvtoVAZ for the symbolic sum of one ruble to NAMI, a state-backed automotive research and development center, Russian Industry Minister
was quoted as saying by Russia’s state-run news agency Ria Novosti.
The French car maker would have the option to buy back its stake within five to six years as part of a potential deal, Mr. Manturov said, according to Ria Novosti. Mr. Manturov also said that Renault’s factory in the center of Moscow, which makes vehicles under the Renault and Nissan brands, will be transferred to the city’s government, according to Ria Novosti.
Mr. Manturov’s office didn’t respond to a request for comment.
Last month, Renault said that it was assessing options on its stake of AvtoVAZ and planned to write off the value of its Russian activities, which were valued at €2.2 billion, or around $2.4 billion, at the end of last year.
Renault and other Western firms have been under pressure to divest from Russia since its full-scale invasion of Ukraine began in late February, triggering waves of Western sanctions aimed at cutting off Moscow from the global financial system. The sanctions have crippled supply chains, making it hard for foreign firms to operate in Russia while also depriving them of any Western buyers for their Russian assets.
Renault’s deep roots in Russia makes it a bellwether for other Western companies exploring options on how to leave the country. Renault invested billions of euros in Russia and last year had almost 30% of market share there. It also employs some 40,000 people in the country.
Russia’s lower house of parliament, the State Duma, is considering legislation that would allow Russia to nationalize the assets of foreign companies that have exited from the country in response to its invasion of Ukraine. The ruling United Russia party, which proposed the legislation, said it is aimed at preventing bankruptcies and preserving jobs. Russian President
has approved the proposal.
Renault’s buyback options will be priced according to how much money is invested in AvtoVAZ while it is under NAMI’s stewardship, Mr. Manturov said, according to Ria Novosti, adding: “There will be no gifts here.”
At the start of the war, Renault initially tried to keep its activities in Russia going while also exploring ways to leave the country, according to people familiar with the matter. The firm tried to reorganize its supply chain to replace parts its factories were missing because of sanctions and the war in Ukraine, these people said.
As the war continued, however, Renault’s operations in Russia began to burn through their cash reserves. The auto maker had to continue paying salaries and suppliers as sales and production shriveled.
Since then, the AvtoVAZ plant has been running at much reduced capacity as Western sanctions and the global chip shortage deprived it of key parts. Renault’s plant in Moscow, meanwhile, reopened for a few days last month to liquidate the stock of parts that it had on hand, but it has since been closed for weeks.
NV—maker of the Jeep and Peugeot brands—last week suspended its operations in Russia, citing a “rapid increase in cross sanctions and logistical difficulties.”
NAMI is a Moscow-based automotive development and research center founded in 1918 after the Bolshevik Revolution. The group co-owns Aurus, a Russian car company launched in 2018 that aims to produce luxury vehicles. Mr. Putin that year drove through Moscow in an Aurus car on his inauguration day for a fourth term.
Russian state-owned conglomerate Rostec Corp. owns the remaining 32% of AvtoVAZ. Its CEO,
has been subject to Western sanctions for years over Russia’s annexation of Crimea.
AvtoVAZ produces Lada, Russia’s only homegrown brand with significant market share, accounting for 21% of auto sales in Russia last year. The company was founded in 1966 when the Soviet Union built a mammoth factory on the banks of the Volga River and renamed the city that mushroomed around it after Palmiro Togliatti, the leader of Italy’s Communist Party at the time. The plant sprawled over 1,000 acres, more than New York’s Central Park.
—Evan Gershkovich contributed to this article.
Write to Nick Kostov at [email protected]
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