French automaker Renault said on Wednesday it was ceasing operations at a Moscow plant and reassessing its partnership with Russia’s largest automaker, AvtoVAZ.
Renault owns 68 percent of Lada vehicle maker AvtoVAZ, and relies on Russia for about 18 percent of its global car sales.
“Regarding its stake in AvtoVAZ, Renault Group is evaluating the options available, taking into account the current environment, while acting responsibly towards its 45,000 employees in Russia,” the company said in a statement. “Renault Group recalls that it is already implementing the necessary measures to comply with international sanctions.”
The company has also revised its financial outlook for 2022, saying it now expects an operating profit margin of 3 percent, down from a previous forecast of more than 4 percent.
Several other automakers have shut down operations in Russia in response to the invasion of Ukraine and international economic sanctions that have severely curtailed trade with the country.
Volkswagen has shut down two Russian factories. Ford Motor and Stellantis have halted production at Russian factories they own along with other automakers. Those and other automakers have also halted the export of cars and parts to Russia.
Renault sold more than 482,000 vehicles in Russia last year, more than any other western automaker. Last week, it stopped production at two other AvtoVAZ plants, in Togliatti and Izhevsk, due to a shortage of parts. Those factories are several hundred miles east of Moscow.
Renault acquired a 25 percent stake in AvtoVAZ in 2008, when Russia was considered to have great potential for automakers, along with China, Brazil and India. But only the Chinese market has taken off as expected, and Russia in particular has been held back by Western sanctions after it annexed Ukraine’s Crimea region in 2014.
Since the annexation, some automakers have scaled down their activities in Russia. General Motors withdrew from a joint venture with AvtoVAZ in 2019 and ended its presence in Russia.
Renault was one of the few that continued to invest there. It bought Nissan’s stake in AvtoVAZ in 2017 and consolidated the Russian unit into its global operations.
