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Renault begins to withdraw from the Russian market

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Having become the leading car manufacturer in Russia since 2016, with 30% of the market share, the Renault group is trying to extract itself from a position that has become very uncomfortable. The car manufacturer announced on Wednesday evening March 23 that it “suspend” production at its Moscow plant, one of three Renault has in Russia. With regard to the other two factories, the group “investigate possible options”which opens the door to a possible total exit from the Russian market.

→ READ. War in Ukraine: Renault suspends its industrial activities in Russia

This option is still difficult to consider, because the risk is that of confiscation by the Russian state of the group’s assets in this country. This is indeed what is provided for in a law adopted urgently, while announcements of the departure of foreign groups have multiplied. For all intents and purposes, Renault announces that it has provisioned 2.2 billion euros in its accounts, the value of its investments in Russia.

The takeover of Lada, despite the annexation of Crimea

Renault is very present in Russia. He is under his own name. The Moscow plant thus produces 95,000 vehicles per year sold under the Renault badge: Dusters, Kapturs (slightly different from the French Captur model) and Arkanas. But above all, it became a key player in the market in 2016, after the annexation of Crimea in 2014 and despite the worrying signal that this act constituted.

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At the time, Renault acquired 69% of the Avtovaz group, maker of Lada, the most popular car in the Soviet Union. Since then, in the two factories of Togliatti and Izhevsk that it acquired, Renault produces Vesta and Granta, the two best-selling cars in the country.

Within the Renault-Nissan alliance, the French manufacturer has been given the mission of leading the commercial offensive in Russia and Brazil, while the Japanese is in charge of China and India. Russia is the second market for Renault, behind Europe. The group sells 500,000 vehicles a year there and employs 45,000 people.

Renault was rounding its back

Since the start of the war in Ukraine, Renault had been trying to turn its back. The summer holidays had been brought forward and production stopped on March 16, for three weeks, officially due to a lack of spare parts. But while the Russian offensive has been going on for a month already, and does not give the impression of stopping, the management of Renault was challenged by a certain number of collaborators and was faced with a wave of criticism from outside. .

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→ READ. War in Ukraine: President Zelensky calls on French companies to leave Russia

On Wednesday March 23, speaking before French parliamentarians, Ukrainian President Volodymyr Zelensky notably cited Renault as being a “sponsor of the Russian war machine” and asked the group to“stop funding the murder of women and children”.

The group will therefore deprive itself of 20% of its production in Russia. But he intends for the moment to continue to market his most popular Lada models. And this even if the looming economic crisis will necessarily result in a drop in sales.

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To leave or to stay, what French groups do

Hermes, Chanel, Cartier, LVMH, Kering… Luxury brands were the first French companies to suspend their activities in Russia. They were joined by Airbus. Alstom or L’Oréal have ended sales while continuing to produce in the country.

BNP Paribas and Crédit Agricole have just withdrawn, accentuating the pressure on Société Générale and its subsidiary, Rosbank.

The brands of the Mulliez group (Auchan, Decathlon, etc.) continue their activity, even if a Leroy Merlin store was bombed in kyiv.

TotalEnergies froze its investments and will stop its oil purchases, but assures that it cannot do without Russian gas.

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