Renault will be given for the ruble

The concern may sell AvtoVAZ for a ruble. Russian officials want rights to future models.
Renault can sell its 67.6% stake in AvtoVAZ “for a ruble” to the FSUE NAMI subordinate to the Ministry of Industry and Trade, and its plant in Moscow to the city government, Industry Minister Denis Manturov said. But the company, he said, will receive an option to buy back its stake in a few years. At the same time, according to Kommersant, the French automaker was discussing a cash deal, and Russian officials demanded from them the right to new models - the AvtoVAZ line should have been actively updated using the Renault CMF-B platform from the end of 2022, as well as a license for their release.

Renault may transfer its stake in AvtoVAZ to FSUE NAMI, subordinated to the Ministry of Industry and Trade, said the head of the ministry, Denis Manturov. The French company owns 67.6% in Lada Auto Holding, the rest belongs to Rostec, which is subject to sanctions, including by the EU. According to Mr. Manturov, we are talking about a "conditional deal for the ruble": "But with an option for five or six years - the period during which they can decide to buy back the shares. And if we make investments during this period, this will also be taken into account in the cost. There will be no "gifts" here" (quote from Interfax). The new leadership of AvtoVAZ will be appointed by "NAMI together with Rostec", the minister added. It should be noted that it was after the arrival of new shareholders in the form of Renault-Nissan (Nissan withdrew from the alliance in 2017) that the financial recovery of AvtoVAZ began.

The legal entity that owns AvtoVAZ was transferred to Russian jurisdiction only at the end of 2021, although the fact that the Dutch joint venture Alliance Rostec Auto B.V. could be re-registered in the Russian Federation, the head of Rostec, Sergey Chemezov, said back in 2014. He clarified that such a “wish” comes from Rostec, and the offshore was registered in Holland “at the request” of Renault-Nissan and “did not manage financial flows”, performing a “purely administrative” function. In 2018, lawyers told Kommersant that the re-registration of the joint venture could be carried out at the request of the government due to the constant decrease in the share of Rostec in the capital of Alliance Rostec Auto and, consequently, the decrease in the level of influence that the state can have on the decision-making process related to the fate of AvtoVAZ.

Denis Manturov noted that Renault is discussing leaving "due to a lack of funds to maintain the performance or activities of its divisions in Russia." Against this background, the company "makes a decision to transfer the shares of AvtoVAZ and Avtoframos (the Moscow plant Renault Russia - Kommersant)".

At the same time, Avtoframos can be transferred to Moscow as a subject. Denis Manturov also indicated that other cars will be produced at the Renault plant.

It should be noted that the limited cash-flow in conditions when factories are idle due to the inability to supply components, as well as restrictions on investments in the Russian Federation, is a key problem for all automakers. Kommersant's sources note that gradually many players may leave for the same reasons in a chain reaction.

Kommersant's interlocutors in the car market say that they also discussed a deal with Renault on other terms, where the sale of assets was supposed to be. At the same time, one of them knows that the Russian authorities demanded from Renault the right to new models and a license to produce them for several years. This is realistic only if it is possible to arrange some kind of supply of components from Romania, the interlocutors of Kommersant specify.

Recall that already at the end of 2022, a new Lada model on the CMF-B platform of the Renault-Nissan alliance was to be presented. Now CMF-B is already being used for the new Logan and Sandero models of another budget Renault brand - the Romanian Dacia.

Now AvtoVAZ depends on cooperation with Renault for all new models.

Only two models are produced in Tolyatti on their own platforms - Granta (SKP Kalina) and Niva (SKP), as well as Largus and Xray (line B0) based on the Romanian Dacia. The plant in Izhevsk produces Lada Vesta, created on its own platform, but it also has synergy with Renault. Plant conveyors were idle for almost the whole of April (corporate vacation was postponed) in order to accumulate a warehouse of components, and now they have started working this week.

The Renault plant in Moscow has been idle since February 28, but started up on March 21 for three days, which caused a wide resonance. After the assembly line shutdown on March 23, the French company pointed to its involvement with AvtoVAZ, saying for the first time that the group was evaluating "all available options given the current situation", acting responsibly towards its 45,000 employees. On April 22, Thierry Pieton, financial director of the French automaker, said during a conference with investors: “On March 23, we announced the decision to suspend our business in Russia and evaluate the possibilities regarding our stake in AvtoVAZ. Negotiations are ongoing and progress is being made.”

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