Renault is exploring the possibility of transferring ownership of the Russian company to a local investor as a way out of the country and going bankrupt, sources told Bloomberg.
Such a transfer is currently preferred and will help free the French company from legal liability to the Russian company that makes Lada and its 45,000 employees.
Recall that the automaker announced last week that it was suspending industrial activities in the country and stressed that it would try to approach its workers in Russia in a responsible manner.
According to sources, no final decision has been made yet and other options may appear to resolve the issue. How the Renault plant in Moscow will fit into this plan is also unclear. The French carmaker will not be able to transfer its 68% stake in AVTOVAZ to its second shareholder, the state-owned company Rostec, as the Russian partner is under sanctions.
At the end of last year, the manufacturer estimated its operations in Russia, the second largest market, at 2.2 billion euros ($2.4 billion), including goodwill. Last year, Renault received about 10% of its revenues from Russia and AVTOVAZ’s margin was 8.7%, much higher than the 0.6% realized by the Group’s auto division without a business, according to the latest annual report.
As auto factories in Russia struggle to produce cars amid a shortage of imported parts, the Russian company will burn money and lose profits, the source said.
AVTOVAZ produces cars and some parts for the Lada and Renault brands and has two plants – in Tolyatti and Izhevsk. Renault Group owns 68% of the company’s shares, Rostec – 32%.
Source: Z R