The Renault Group has sold its stake in Russian car maker Avtovaz to the Russian Central Research and Development Automobile and Engine Institute, following Russia's invasion of Ukraine.
The French firm owned a 67.69% stake in Avtovaz, which employs more than 45,000 people in Russia and builds various Dacia, Lada and Renault models.
Part of the deal with the Russian research institute includes a six-year option for the Renault Group to re-purchase its stake in Avtovaz, indicating that the company could return to Russia in the future.
Renault Russia, meanwhile, will be sold off entirely to the city of Moscow.
"Today we have taken a difficult but necessary decision; and we are making a responsible choice towards our 45,000 employees in Russia while preserving the Group's performance and our ability to return to the country in the future in a different context,” said Renault Group CEO Luca de Meo.
“I'm confident in the Renault Group's ability to further accelerate its transformation and exceed its mid-term targets.”
Group Renault initially suspended activities in Russia back in March, in what was a rapid U-turn after announcing only a day earlier that it would restart production at its Moscow plant.
The French firm will continue to target a “positive automotive operating free cash flow”. The company was previously aiming for a figure in excess of €1 billion (£840 million).
“A non-cash adjustment charge amounting to the accounting value of the consolidated intangible assets, property, plant and equipment and goodwill should be recorded at the time of the 2022 first-half results,” the Renault Group said, adding that as of 31 December 2021, this value amounted to almost €2.2bn (£1.85bn).
It originally suspended Russian production of its cars – which include the Renault Captur, Renault Arkana, Dacia Duster, Dacia Logan and Dacia Sandero – citing issues with "production logistics" in late February. This was just one day after Russia invaded Ukraine.
Russia accounted for a fifth of the Renault Group's global production output and 10% of its revenue. The company therefore adjusted its 2022 financial outlook to aim for an operating margin of around 3%, instead of its previous 4% target.
The firm has received criticism for continuing its Russian operations while other brands – such as BMW, Mercedes-Benz and Volkswagen – suspended all activities.
Ukrainian president Volodymyr Zelenskyy told French law makers that Renault, among other French firms, should cease activities in Russia, as they were “financing the murder of children and women, of rape”.
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Renault took a U-turn. It took them a long time to understand that also in French U-turn means Ukraine-turn
Renault might be able to salvage something from this. But in the short term they are screwed. I think their new coupe crossover thingy is made in Russia so back luck if you wanted one of those.
Shame on you Renault, a case of history repeating itself me thinks.