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Sold out by Lada car manufacturer

The war in Ukraine also affected many of the world’s car manufacturers. Several have subcontractors in Ukraine, which are currently struggling with production and delivery. A number of western car brands have production facilities in Russia. Here, there is now an abrupt stand for the vast majority.

Local car production in Russia is also affected. The car giant AutoVAZ, behind Lada, had to reduce production and shut down partially due to lack of parts.

There was also great uncertainty on the part of the owners. French Renault is heavily involved in AvtoVAZ and owns 68 percent of the company.

Global boycott

This has created significant challenges for the French company in the past two months. 8 percent of their income comes from Russia. If we join Renault and AvtoVAZ, the two have about 30 percent of the car market in Russia. In total, they have about 45,000 employees in the country.

Renault first tries to sit still in the boat and drive as usual. But after Ukrainian President Vladimir Zelenskyj spoke directly with the French parliament in March and urged politicians to press for all French companies to withdraw from Russia, that changed quickly. Renault has been cited as an example, calling for a global boycott if they do not respond.

Just hours later, Renault announced that all activities in Russia would be stopped immediately. In addition, the futures of AvtoVAZ should be considered.

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In recent years, Lada has undergone extensive development, including a lot of new technology from Renault. Photo: NTB Scanpix

Solgt for my rubles

Several media outlets now report that Renault has found a solution here. More specifically, all ownership of AvotVAZ will be transferred to the NAMI research institution in Moscow. The price must be one ruble, or around 12 Norwegian øre at today’s exchange rate. According to reports, this stake will then be transferred to the city administration in the Russian capital.

Renault will then have the opportunity to buy back the share, in the next five to six years. But then with deductions for all investments made in the company in the meantime.

How it will go with AvtoVAZ in the future is unclear. The company bases much of its operations on the knowledge, technology and parts of Renault. When this disappears almost overnight, it becomes a demanding task to find alternative solutions. Among other things, it is speculated that they now have to build far less advanced machines than before and remove important equipment, in order to maintain a certain output.

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Lada has been represented in Norway for many years.  But in Russia they still sell a lot of cars.  Photo: NTB Scanpix

Lada has been represented in Norway for many years. But in Russia they still sell a lot of cars. Photo: NTB Scanpix

Will be costly

It is also expected that demand for new cars in Russia will fall sharply, as a result of the war and extensive sanctions against the country.

Until now, the goal for AutoVAZ has been that they should build around three million cars annually by 2025. Now it seems very unrealistic.

At the same time, it is clear that the exit from Russia will cost Renault dearly. In the short term, there is talk of a write-down of at least NOK 20 billion. The share price also fell, after the news of the sale of AvotVAZ became known.

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