Renault resumes making cars in Moscow with apparent backing of French government

Renault has owned a controlling two-thirds stake in the Russian carmaker Avtovaz since late 2016

Mon, 21 Mar, 2022 - 17:00

The French carmaker Renault has resumed manufacturing in its plants in Moscow, bucking the trend of many other large global companies that have cut ties with Russia over its war on Ukraine.

Renault had suspended production at the plant last month, citing logistical problems after the invasion of Ukraine on President Vladimir Putin’s orders. However, Renault’s decision to restart manufacturing has the backing of the French government, which is its main shareholder, according to sources cited by Reuters.

Renault has owned a controlling two-thirds stake in the Russian carmaker Avtovaz since late 2016, after first investing in what was then a fast-growing market in 2007. That means it has larger operations in the country than most other European rivals, with 40,000 local employees, posing a huge challenge as the US, UK and EU governments try to isolate Russia economically.

Avtovaz sold nearly 2,900 vehicles in 2021, and accounting for about 12% of its earnings that year. It started as a state-owned company in the Soviet Union, making cars that became strongly associated with the communist regime under the Zhiguli and then Lada brands.

While the Moscow plant has restarted, Avtovaz said it was partially halting production this week at a huge plant in Tolyatti, a city on the Volga river, and another in Izhevsk, a city 500km to the north-east. The halt was caused by shortages of electronic parts, Avtovaz said.

Several companies from Europe and other rich economies have been forced to write off assets in Russia after government pressure and sanctions.

Those firms remaining in Russia have come under increasing pressure to halt business there, including Nestlé. The Ukrainian president, Volodymyr Zelenskiy, criticised the company, which continues to sell 'essential' products such as baby food, cereals and some pet foods in Russia.