French automaker Renault transfers stake in Russia to state entities for 1 ruble

Renault will transfer 68% of its stake in Russia's largest automaker Avtovaz to an automotive research institute for a symbolic ruble, Russia said Wednesday.

The Russian Trade Ministry also claimed that the Renault plant in Moscow would be transferred to the city government.

Avtovaz's stake will be handed over to the state-backed industrial body NAMI, and the French automaker will have the option to repurchase it in five to six years, Russian Trade Minister Denis Manturov explained, cited by Interfax news agency.

So far, this move would be one of the clearest examples of the problems faced by Western companies trying to leave Russia.

Renault declined to confirm or deny the report.

The company had previously said that it was prepared to give up its 68% stake after Russia’s invasion of Ukraine, although like other companies, from banks to oil majors, it struggled to find outside buyers for the holding company.

Renault is one of the most deeply rooted Western multinationals in Russia, with vast local manufacturing operations and a workforce of approximately 40,000. Russia accounted for about 10% of its turnover and half of its automotive operating margin in 2021, according to Financial Times.

Automakers, including Volkswagen, BMW, and Ford, suspended their operations and joint ventures in Russia after the invasion of Ukraine on February 24. However, it is not yet known whether they plan to make a complete break with the companies.

French lender Société Générale, which had a presence in Russia through its subsidiary Rosbank, agreed this month to sell the business back to its previous Russian owner, oligarch Vladimir Potanin, in one of the rare deals to materialize so far. Potanin has received sanctions imposed by Canada, but not by the European Union or the United States.