Under pressure, Renault was forced to suspend its activities in Russia and plans to withdraw from AvtoVAZ

The position of Renault and its main shareholder, the French state, was difficult to maintain. How to maintain its activities in Russia, a country that “disobeys international law” as Emmanuel Macron said yesterday in aa video shown during the first European Humanitarian Forum, while the authorities of the attacked country, Ukraine, accuse it, through the voice of its president, of being “the Russian war machine” and call for a “boycott” of its products throughout the world? Difficult, even if other private companies, such as TotalEnergies and Leroy Merlin, have explained that a withdrawal would open the door to expropriation.

Renault, Auchan, Leroy Merlin… these companies ridiculed by Zelensky for their presence in Russia

On Wednesday night, after a board meeting, Renault announced the suspension of activities at the Renault factory in Moscow and the possibility of selling its stake in AvtoVAZ, the Russian carmaker. Measures that push the group’s management to revise its financial perspectives downwards, pointing to an operating margin not higher than the 4% initially forecast, but around 3%.

boycott call

The announcement comes as the Ukrainian president cited the French auto group during his speech to French MPs. In a video conference broadcast live to the National Assembly, Volodymyr Zelensky urged French companies to “stop being patrons of the Russian war machine.” And to quote Renault, between Leroy Merlin and Auchan. “French companies must stop financing the murder of women’s children, rapes,” launched the Ukrainian president besieged by Russian troops in kyiv, the country’s capital. “Everyone must remember that values ​​are worth more than profits,” he relentlessly insisted as French companies balked at the economic gambles of leaving the Russian market. A few hours later, the head of the Ukrainian diplomacy, Dmytro Kouleba, openly called for a global “boycott” of the French car manufacturer due to “its refusal to leave Russia”.

Dmytro Kouleba accused Renault, of which Russia is the second largest market, of “supporting a brutal war of aggression” in a tweet. Therefore, he calls “customers and companies around the world to boycott the Renault group.”

More than a Leroy Merlin or an Auchan, Renault’s position on Russia is increasingly difficult to maintain, due to the condition of its main shareholder, which is none other than the French State (15% of the capital) and which is largely involved in the sanctions taken against Moscow.

A nightmare for Renault

At Renault, the scenario of a withdrawal from Russia therefore takes on the appearance of a nightmare with considerable losses, but also with the fear of never returning to this market. The cost of a game would be simply colossal. The French carmaker took control of Avtovaz (the manufacturer of Lada) in the early 2010s and invested several billion euros to modernize the industrial tool and develop a new range of models. If the turnover is still limited (3,000 million only for Avtovaz, that is to say without the sales of the Renault brand), Russia is nevertheless one of the markets where Renault was betting the most on its internationalization. The diamond brand was also preparing to launch a new range accompanied by a new strategy more focused on profits than volumes. With 500,000 cars sold, Russia was already Renault’s second largest market, behind France.