Russia revives the “Soviet car” after the nationalization of Renault

Russia will take control of French carmaker Renault’s operations in the country and revive a Soviet-era car brand, officials said on Monday, in the first major nationalization of a foreign company since the start of the war in Ukraine.

Renault said it would sell its 67.69 percent stake in AvtoVAZ, a Russian company that makes cars including Lada, to a state-run research institute known as NAMI.

Renault’s other investments in Russia, especially a factory in Moscow, will also be sold to the Moscow city government.

The mayor of the Russian capital, Sergei Sobyanin, said that the city will restore the “Moskovich” brand of cars at the plant.

Moskowitz was a major automobile brand in the Soviet Union, but it experienced a sharp decline in the 1990s and disappeared from the market in the early 2000s.

For his part, Luca de Meo, CEO of Renault Group, said in a statement: “Today we made a difficult but necessary decision.”

“We are making a responsible choice towards our 45,000 employees in Russia while preserving the company’s performance and our ability to return to the country in the future in a different context,” he added.
Renault did not give any financial details of its sales, but said the deal included an option to buy back AvtoVAZ’s stake in the next six years.

Last month, Minister of Trade and Industry Denis Manturov indicated to Russian media that the AvtoVAZ deal could be made for one symbolic ruble.

In turn, Ministry official Dennis Buck told state television that the deal allows AvtoVAZ to continue manufacturing the “Duster” passenger car produced by Renault, which now bears the badge like Lada, and is likely to produce Moskvich cars this year.
The sale helps Renault out of the predicament faced by Western companies when deciding whether to withdraw from Russia and to overcome the damage to its revenues.

But continuing to operate in Russia after the war could damage the companies’ reputation with clients.

In an effort to avoid unemployment, the Russian government is urging reluctant foreign investors to resume operations or sell to those who wish.

Renault’s announcement came on the same day that US McDonald’s said it was seeking to sell its business in Russia, which includes 850 restaurants and employs 62,000 people.