While Renault, leader in Russia, with the Lada brand sold its assets in Moscow, McDonald’s announced that it was definitely withdrawing from the country and selling all its activities.
Cornered by the sanctions hitting Russia, the French car manufacturer Renault, leader in the country with the Lada brand which it had recovered, sold its assets to the Russian State, the first major nationalization since the offensive against the Ukraine. On the same day, the American fast food giant McDonald’s, which has been present in Russia for more than 30 years, announced that it was definitively withdrawing from the country and selling all its activities, in reaction to this offensive. The announcement made on Monday by Renault and the Russian authorities provides that the French group will sell its majority stake (67.69%) in the Avtovaz group, the Russian automotive giant with the Lada brand, to NAMI, the Russian research and development of automobiles and engines. The Minister of Commerce and Industry, Denis Mantourov, had indicated at the end of April that the transaction would be made for “a symbolic rouble”, which the diamond brand, on Monday, still did not want confirm. “Agreements have been signed for a transfer of Russian assets from the Renault group to the Russian Federation and the Moscow government,” the ministry confirmed on Monday.
The French automotive group sold the Renault brand’s own assets to the city of Moscow, including its factory near the capital, which produced Renaults and Nissans. Mayor Sergei Sobyanin announced that the factory would relaunch the Soviet brand Moskvitch, whose first cars were produced in 1946 and which were known for their mediocrity. He assured in a statement that “most of the workforce working in the factory and for its subcontractors” would be retained. The Russian truck producer Kamaz will be the main partner of the Moscow plant. According to political analyst Anton Orekh, trying to produce a new car from scratch, in the absence of foreign technologies and components, is like throwing “billions out the window”.
Straightened Lada
The management of Renault had already announced that it would pass in the first half a provision of approximately 2.2 billion euros because of this sale. Renault had committed to Avtovaz in 2008 to become the majority shareholder in 2014. The automotive giant then turned around a Russian group in great difficulty, ravaged by the post-Soviet crises. After heavy investments, and technology sharing with Dacia, Renault’s economy brand, Avtovaz was starting to make a profit. Russia was the Renault group’s second largest market in the world behind Europe, with nearly 500,000 vehicles sold in 2021. The French group, the most committed manufacturer in Russia, and one of the last to leave, however keeps the half-open door: he will be able to buy back shares in Avtovaz for six years.
Referring to “a difficult but necessary decision”, the general manager of Renault, Luca de Meo defended “a responsible choice towards our 45,000 employees in Russia, while preserving (…) our ability to return to the country in the future , in a different context. Avtovaz manufactures cars in particular in its gigantic factory in Togliatti (south-west, on the Volga river), which employs 35,000 people. The Dacia Logan and Sandero are also marketed there with the Renault logo. But the Russian market collapsed in the context of the conflict in Ukraine, and the group’s factories were operating at idle or not at all due to a shortage of imported components, caused by Western sanctions.
For its part, McDonald’s, which had temporarily closed its stores in Russia at the beginning of March, announced that it was definitively withdrawing from the country and selling all its activities, justifying this decision by the need to “remain inflexible” as to its “values”. The American giant has 850 restaurants and 62,000 employees in Russia, represents 9% of the company’s total turnover and 3% of its operating profit. The group is seeking to resell its entire Russian portfolio to a local player. No name of buyer has been announced. A considerable number of Western brands have announced that they are suspending or ceasing their activities in Russia, either to denounce the Russian offensive in Ukraine, or because the sanctions do not allow them to continue their activities.