Renault announced on Monday that it would stop active operations in Russia and move to transfer its Russian subsidiary to the Moscow City Council, while also handing over the majority stake in Avtovaz to a Russian state entity. The company retains the right to buy back that stake at various points over the next six years, a provision designed to preserve optionality amid shifting market conditions.
The transfer agreement indicates that control of Avtovaz could be reassessed at certain intervals during this six-year period. Avtovaz, which holds a 67.69 percent stake and is currently under the management of the Automobile and Engines Research and Development Central Institute, commonly known as NAMI, is featured in Renault’s plans as a key asset subject to reevaluation as the company recalibrates its portfolio. Renault disclosed in a formal statement that the division would be incorporated into the broader calculations guiding its Russia strategy as operations wind down. The move follows Renault’s decision, announced on March 23, to suspend activities in Russia, its second-largest market behind France, with assets valued and adjusted to reflect the evolving situation.
As of December 31, 2021, the assets held in Russia were valued at 2.195 million euros. The final adjusted value will be determined when Renault reports the results for the first period after the transfer is completed. This valuation will be determined in line with the transfer date and subsequent accounting treatments, ensuring the figures capture the true financial impact of the reorganization.
For Renault, disposing of Avtovaz at a price kept confidential represents financial relief, particularly given the ongoing costs associated with the Russian operation. The company has been meeting payroll for about 45,000 employees in Russia in recent weeks, despite a significant drop in production, signaling the broader economic and social commitments tied to the plants and workforce targeted for restructuring.
400,000 vehicles produced in Russia
Under the new arrangement, the workforce in Russia will report to the Moscow City Council following Renault Russia’s exit and NAMI’s involvement in the Avtovaz framework, with Avtovaz forming a part of the Russian Ministry of Industry’s structure. Renault Russia previously produced around 95,000 vehicles during the prior year, including the Duster and Arkana models whose primary markets were Russia and nearby regions. The plan indicates that Renault-branded vehicle assembly will no longer occur at Moscow facilities. Avtovaz, by contrast, produced approximately 400,000 vehicles in 2021, largely under the Lada brand, reflecting its long-standing prominence in the domestic market and the surrounding area.
Renault’s chief executive officer, Luca de Meo, characterized the decision as difficult yet necessary and responsible. He noted that the majority of the company’s Russia operations, including the local workforce, would be affected by the shift, while underscoring the company’s intention to preserve the option—should market conditions permit—for a future return to Russia under a different context. The executive reiterated Renault’s broader confidence in the company’s strategy and its ongoing transformation, emphasizing that the move would enable Renault to accelerate progress toward its medium-term targets and strengthen its overall balance sheet despite the current setback in its second-largest market.
The strategic pivot in Russia is framed as part of Renault’s broader effort to streamline operations, reallocate capital, and focus on higher-potential markets while maintaining the flexibility to revisit Russia if geopolitical and economic conditions become more favorable. In this context, the company highlights its commitment to a disciplined, value-driven transformation that seeks to balance short-term financial relief with long-term strategic resilience.
Overall, the relocation of assets and the transition of the Avtovaz framework reflect Renault’s willingness to adapt its global footprint, preserve key capabilities within Russia where possible, and pursue a course that aligns with both financial prudence and strategic clarity for the road ahead.