Renault's Russia buyback to cost at least $1.3 billion, says Russia's Avtovaz

Reuters

25-02-2025

Feb 25 (Reuters) - Should French carmaker Renault (RENA.PA), opens new tab wish to buy back its majority stake in Russia's top carmaker Avtovaz, it would have to pay at least 112.5 billion roubles ($1.3 billion) to cover investments made since selling for only one rouble in 2022, Avtovaz said.
U.S. efforts to secure a quick deal to end the war in Ukraine have sparked speculation that Western companies could seek to return to Russia in the event a peace deal is signed and Avtovaz's position offers the first indication of how hard Russian firms might push their former Western partners in negotiations.
Renault last week said it was "very unlikely" to return to Russia under the exit terms it agreed, including a six-year buyback clause, when selling its 67.6% stake in Avtovaz to the Russian state in May 2022 following Moscow's invasion of Ukraine. The deal also included Renault's Moscow plant, but that was sold without a buyback clause.
At the time, then industry and trade minister Denis Manturov said the cost of returning would include investments made by Russia in the interim.
"It is clear that these investments will have to somehow be refunded, so the entry price will not equal the exit price of one rouble," the TASS news agency cited Avtovaz CEO Maxim Sokolov as saying on Tuesday.
Renault declined to comment on Avtovaz's comments. On the question of a return to Russia, its official position is: "We do not foresee any change for the short term."
Renault allocated about 20-22 billion roubles annually for facilities renovation, Sokolov said, but Avtovaz raised this to over 27.5 billion roubles in 2023 and almost 40 billion roubles last year.
Sokolov did not explain the sharp rise in investments, but Avtovaz has been increasing production.
Following a sales slump in 2022, Avtovaz has seen steady growth in sales of its Lada cars and launched new models, now competing with Chinese carmakers that have seized market share.
Avtovaz sold almost 460,000 Lada cars in 2024, an increase of 30.2% from the year before and more than double the nearly 190,000 sales in 2022 when sanctions and the exodus of foreign carmakers hit Russia's auto market hard.
Sokolov did not specify whether the investment figures he named accounted for total investments or just Renault's hypothetical portion, but the overall figure serves to illustrate what other companies with buyback clauses might be up against.
Hundreds of Western firms have exited Russia since February 2022. Some, such as Renault, McDonald's (MCD.N), opens new tab and Henkel (HNKG.DE), opens new tab, agreed to buyback options when exiting.
($1 = 86.5955 roubles)