French carmaker Renault to sell Russian operations to Moscow

Russia will take control of French car manufacturer Renault's operations in the country and resurrect a Soviet-era auto brand, officials said Monday, marking the first major nationalization of a foreign business since the war in Ukraine began.

Renault said it would sell its majority stake in Avtovaz, a Russian car company best known for its Lada brand, to a state-run research institute known as NAMI.

Renault's other Russia operations, primarily a factory in Moscow, will be sold to the Moscow city government. The mayor of the Russian capital, Sergei Sobyanin, said the city would bring back the Moskvich brand for cars made at the factory. Moskvich was a major auto brand in the Soviet Union but went into steep decline in the 1990s and vanished from the market in the early 2000s.

“Today, we have taken a difficult but necessary decision," Renault CEO Luca de Meo said in a statement, “and we are making a responsible choice towards our 45,000 employees in Russia, while preserving the Group’s performance and our ability to return to the country in the future, in a different context.”

Renault didn’t give any financial details of its sales but said the deal included an option to buy back the Avtovaz stake in the next six years. Trade and Industry Minister Denis Manturov indicated last month to Russian media that the Avtovaz deal could be conducted for a symbolic one ruble.

Ministry official Denis Pak told state TV that the deal allows Avtovaz to keep making Renault's Duster passenger car design, now badged as a Lada, and that the new Moskvich operation was likely to produce cars this year.

Selling gets Renault out of a bind that Western companies are facing as they determine whether to pull out of Russia and weather the hit to their income. But continuing to work in Russia...