According to foreign media reports, people familiar with the situation said that despite the escalation of the situation in Russia and Ukraine, Renault still maintains a long-term relationship with Russia because it fears the high cost of withdrawing from the Russian joint venture. Renault wants to avoid Russian nationalization of AvtoVAZ, the carmaker in which it has a majority stake, and AvtoVAZ played a key role in Renault's turnaround. People familiar with the matter also revealed that Renault's position was supported by its majority shareholder, the French government.
Since the situation in Russia and Ukraine, the French government has rarely issued a public statement on Renault. French Finance Minister Bruno Lemerre (Bruno Le Maire) said that as long as French private companies "strictly abide by the sanctions", they are free to decide whether to continue to do business with Russia. Renault spokesman said that the company will continue to monitor the development of the situation.
In the past few days, Renault has become the only major global carmaker that has neither pulled out of trade with Russia nor permanently shut down local factory production. Rival Stellantis last week suspended imports and exports of cars from Russia, while Nissan, Renault's Japanese partner, also stopped exporting cars to Russia.
Last week, Russia proposed to nationalize foreign companies that had pulled out of the Russian market because of the escalating situation in Russia and Ukraine, so their assets were at risk of being confiscated. Mercedes-Benz said on March 11th that about 2 billion euros ($2.2 billion) of its assets in Russia could be at risk of confiscation. At present, a factory operated by Mercedes-Benz near Moscow is temporarily closed.
Renault has about 30 per cent of the Russian car market and employs about 40,000 people in Russia. Renault had a 68 per cent stake in AvtoVAZ, the carmaker, in the Soviet era, and about 10 per cent of its revenues came from Russia, so Renault was the most affected among its peers.
Renault's share price has fallen by about 1/4 since the situation in Russia and Ukraine, and international rating firm Fitch (Fitch) has warned that Renault's turnaround plan may fall short of success. But Jean-Dominique Senard, chairman of Renault, said the current crisis triggered by the situation in Russia and Ukraine was unlikely to threaten Renault's recovery. Renault's recovery is on the right track and its long-term strategy goes far beyond the current situation in Russia. "
Jorge Velandia, an analyst at market research firm Alphavalue, wrote in a report that AvtoVAZ is likely to face an operating loss this year, so Alphavalue downgraded its recommended rating on Renault shares. Alphavalue said it was "highly unlikely" that Renault would withdraw from the joint venture AvtoVAZ.
"given the risks posed by the situation in Russia and Ukraine and the long-term impact of Western sanctions on the Russian economy, Russian car demand is likely to fall significantly in the coming years," Alphavalue said. The value of AvtoVAZ, a Renault joint venture, has fallen to zero.
Renault has suspended production at its assembly plant near Moscow until March 18 because of supply chain difficulties. Two other plants operated by AvtoVaz in Togliatti and Izhevsk were also closed for several days last week because of a "continuing crisis in the supply of electronic components," the company said in a statement.
