Car Vrum

The Russian invasion of Ukraine has prompted many car manufacturers to shut down their production and sales activities in Russia. However, Renault faced a much bigger problem. The French conglomerate has been involved with Avtovaz, Lada’s parent company, since 2008, taking ownership five years ago. Renault chief Luca de Meo said to “keep all options open” regarding Avtovaz, but came under increasing pressure. Several European countries called for a boycott of Renault if the brand did not sever its ties with Russia.

Renault sells Lada to Russian government for a symbolic amount

And that’s what the company is doing now. Renault sells its 67.69 percent stake in Avtovaz to the Russian government agency NAMI. The accompanying press release is silent about the price per share, but it is believed to be a symbolic amount. Based on anonymous sources, the Financial Times reports a price of 1.5 euro cents per share. A big loss for Renault, also because Avtovaz is responsible for about 15 percent of the group’s net profit. Avtovaz’s profit margin is almost twice as high as Renault’s.

Avtovaz has production problems due to economic sanctions against Russia

A bit opportunistic – but also logical given Lada’s huge profitability – the fact that Renault has negotiated a buy-back option. The manufacturer can regain its interest in Avtovaz within six years. Renault writes off 2.2 billion euros on the sale of Lada, which now has serious production issues. Due to the sanctions against Russia, the supply of parts has largely come to a standstill. Lada has already announced an assembly stop of a few days, because the necessary parts are not there.