How exposed is Renault due to its 69% ownership of AvtoVAZ?

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Renault Faces Significant Exposure Through Its Stake in AvtoVAZ

Renault's exposure stemming from its 69% ownership of AvtoVAZ, Russia's largest automaker, is substantial. This significant stake places the company in a particularly vulnerable position due to its partnership with Rostec, a state-owned defence conglomerate. Renault is currently evaluating various strategic options for its involvement with AvtoVAZ, taking into account the prevailing geopolitical circumstances and its workforce of 45,000 employees in Russia.
Renault's Significant Stake in AvtoVAZ

Renault holds a controlling 69% interest in AvtoVAZ, the leading automotive manufacturer in Russia. This substantial ownership means that the performance and operational status of AvtoVAZ are directly linked to Renault's broader financial health and strategic considerations. The company's decision to revise its 2022 financial outlook, now projecting a group operating margin of around 3 per cent compared to a previous forecast of at least 4 per cent, indicates the material impact of its Russian operations.
Partnership with Rostec Amplifies Risk

The company's investment in AvtoVAZ is further complicated by its association with Rostec. Rostec is a state-owned defence conglomerate managed by an individual who is a close associate of Russian President Vladimir Putin and has been subjected to sanctions. This linkage to a sanctioned entity inherently increases the complexity and potential risks associated with Renault's operations and investments within Russia.
Suspension of Moscow Operations and Ongoing Assessment

In response to calls for a boycott and the broader geopolitical environment, Renault announced the immediate suspension of operations at its Moscow factory. Concurrently, the company is actively assessing all available options regarding its stake in AvtoVAZ. This assessment is being conducted with careful consideration for the current operating environment and a commitment to acting responsibly towards its 45,000 employees in Russia.

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How exposed is Renault due to its 69% ownership of AvtoVAZ?

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