Russian authorities will decide how to use Renault’s plant in Moscow by the end of next week, the ministry of industry and trade said on Thursday, after the carmaker announced it was suspending operations there.
Renault, the biggest player in the Russian auto market, said it had stopped production at the plant and would assess its options on its majority stake in Avtovaz, Russia's top car-maker. following Russia's invasion of Ukraine.
Renault had been silent until now on its long-term intentions in Russia, its second biggest market after France. It employs thousands more people there than main rivals that froze operations days after the invasion, such as Volkswagen.
Shares in the French car-maker were down 2 per cent in early afternoon trade after it became the latest international company to distance itself from Russian partners over the invasion of Ukraine.
The Western car-maker with the greatest exposure to the Russian market said on Wednesday that it was considering taking a €2.2 billion non-cash charge in the first half to write off its assets in Russia. That’s equivalent to a third of its current market value.
Investors have wiped 40 per cent off its market cap over the past month.
Renault did not give details on how it would handle a retreat from its second-biggest market, one of more than 400 companies to withdraw, leaving behind assets worth billions of dollars.
The Russian government’s comments about the future of the factory come after the Kremlin suggested it could nationalise assets of foreign firms that left the country.
“The ministry of industry and trade will discuss the prospects of developing the Renault Russia factory with the Moscow government. The joint solutions will be announced by the end of next week,” the ministry said.
The factory in Moscow owned by Renault produces the Renault Duster, Kaptur, Arkana and Nissan Terrano models.
“The ministry of industry and trade is in constant contact with Avtovaz and Renault Group management,” the ministry said in a statement.
Avtovaz, which is controlled by Renault and produces the Lada and Renault car brands, partially halted output at its plants in Togliatti and Izhevsk this week due to shortages of electronic parts.
The company said on Thursday that it would manufacture new models without relying on imported components and would work to rebuild its supply chains. It imports about 20 per cent of its parts and raw materials.
The Russian industry ministry said that everything necessary was being done to resume operations at Avtovaz’s assembly lines, including the creation of components stocks.
Renault and other Western companies including food companies Nestlé and Danone have faced criticism over their continued presence in the country.
It joins several French companies, including oil and gas major TotalEnergies and banks BNP Paribas and Crédit Agricole, in stepping up measures to cut ties with Russia in recent days, several weeks after other international peers in those sectors pulled back. – Reuters / The Financial Times Limited 2022