French automaker Renault has handed over its Russian assets to the Russian government, both sides announced on Monday, the first major nationalization since sanctions began over Moscow’s military campaign in Ukraine.
Renault controlled 68 percent of AvtoVAZ, Russia’s largest automaker with the country’s largest brand Lada, but after Russia’s military intervention in Ukraine was under pressure to leave the country.
Renault has sent billions of euros to the Soviet-era plant after two automakers signed a strategic partnership agreement in 2008.
No financial details were reported, but Russian Industry and Trade Minister Denis Manturov said in April that Renault planned to sell its Russian assets for “one token ruble.”
“Agreements have been signed on the transfer of Russian assets of Renault Group to the Russian Federation and the government of Moscow,” the Ministry of Industry and Trade said in a statement on Monday.
Under the agreement, Renault will retain a six-year option to buy out AvtoVAZ.
The deal also included Renault’s Moscow plant, Avtoframos, which produces Renault and Nissan models.
“Today we have made a difficult but necessary decision, and we are making responsible choices towards our 45,000 employees in Russia, while maintaining the group’s performance and our ability to return to the country in the future, in a different context,” said Renault. This was stated in a statement by Director General Luca de Meo.
Renault declined to confirm whether it had sold its Russian assets for one ruble contacted by AFP.
Thanks to AvtoVAZ last year, Russia was the second largest market of the Renault Group after Europe, where about half a million cars were sold.
Moscow Mayor Sergei Sabyanin said that the production of cars at the Renault plant will resume under the Soviet-era Moskvich brand after the French automaker decided to close it.
“It is his right, but we cannot allow thousands of workers to lose their jobs,” Sabyanin said.
“In 2022, we will open a new page in the history of Moskvich,” he added.
“We will try to make most of the team work directly at the plant and with its subcontractors.”
Since President Vladimir Putin sent troops to Ukraine in late February, Renault has had difficulty supporting its operations due to a lack of components following the imposition of Western sanctions.
Ukrainian President Volodymyr Zelensky in March called on Renault and other French companies to leave Russia. Kyiv has also called for a boycott of Renault cars until they leave Russia.
On February 24, Putin ordered the Russian military to enter pro-Western Ukraine, sparking unprecedented Western sanctions against Russia and an outflow of foreign corporations including H&M, McDonald’s and Ikea.
Authorities said they were ready to nationalize foreign assets, and some officials assured Russians that their favorite brands would have a domestic alternative.
Officials in Moscow have sought to downplay Western sanctions, promising that Russia will adapt and take steps to stop the flight of foreign currency and capital.