Russia has nationalized a major factory that used to be owned by Renault and intends to use it to revive the famous Soviet-era Moskvitch car in what the French automaker has called a “responsible choice” for its thousands of workers. employees in Russia.
The move appears to be the first major transfer of private assets into state hands after Russian authorities threatens nationalize Western companies that emerged from Moscow’s invasion of Ukraine.
“I have decided to classify the plant as a city asset and resume production under the historic Moskvitch brand,” Moscow Mayor Sergei Sobyanin announced.
“We will open a new page in the history of the Moskvitch in 2022,” he added, promising to retain “most” of the Renault factory staff and contractors.
An iconic Soviet brand, Moskvitch cars were ubiquitous on the streets of the Soviet Union for decades. The production company has been declared bankruptcy in 2006, 75 years after releasing its first model and five years after producing its last vehicle.
In a statement carried by Reuters, Renault described the sale of its majority stake in Avtovaz to NAMI and 100% of Renault Russia shares to the city of Moscow as a “responsible choice.”
“Today we made a difficult but necessary decision, and we are making a responsible choice towards our 45,000 employees in Russia,” said CEO Luca de Meo.
De Meo said the decision safeguards Renault’s performance and its ability to return to Russia in the future in a different context.
Renault confirmed a non-cash write-down of nearly $2.29 billion to reflect potential costs of suspending operations in Russia.
Renault started automobile production in Russia under a joint venture with the city of Moscow in 2005.
Renault, which had the most exposure to the Russian market among Western automakers, suspended operations at its Moscow plant in March 2022 following Russia’s invasion of Ukraine.
The French company was also evaluating options on its majority stake in Russia’s top automaker Avtovaz.
Russian Ministry of Industry and Trade mentioned Renault’s 68% stake in Avtovaz will be transferred to the ministry’s automotive institute NAMI, which had participated in the creation of a fleet of presidential vehicles.
The ministry said Renault will have the option of buying out its stake in Avtovaz, which will service Renault vehicles in Russia, within the next six years.
He did not say whether the same option exists for Renault’s nationalized Moscow plant.