Renault resumes car production in Moscow as rivals cut ties with Russia | Renault

The French carmaker Renault has resumed manufacturing in its plants in Moscow, bucking the trend of many other large global companies that have cut ties with Russia over its war on Ukraine.

Renault had suspended production at the plant last month, citing logistical problems after the invasion of Ukraine on Vladimir Putin’s orders. However, Renault’s decision to restart manufacturing has the backing of the French government, which is its main shareholder, according to sources cited by Reuters.

Renault has owned a controlling two-thirds stake in the Russian carmaker Avtovaz since late 2016, after first investing in what was then a fast-growing market in 2007. That means it has larger operations in the country than most other European rivals, with 40,000 local employees, posing a huge challenge as the US, UK and EU governments try to isolate Russia economically.

Avtovaz sold nearly 2,900 vehicles in 2021, making profits before tax of € 186m (£ 156m) for Renault – or about 12% of its earnings that year. Avtovaz started as a state-owned company in the Soviet Union, making cars that became strongly associated with the Communist regime under the Zhiguli and then Lada brands.

While the Moscow plant has restarted, Avtovaz said on Monday it was partially halting production this week at a huge plant in Tolyatti, a city on the Volga river, and another in Izhevsk, a city 500km to the north-east. The halt was caused by shortages of electronic parts, Avtovaz said.

Carmakers around the world have struggled to source semiconductor computer chips used in everything from car radios to windscreen wipers, and Russian factories are likely to fall further down the queue as its economic isolation deepens. Western sanctions imposed on Russia since the invasion include bans on semiconductor exports.

Several companies from Europe and other rich economies have been forced to write off assets in Russia after government pressure and sanctions.

Authentic Brands, the owner of the Reebok sportswear brand, on Monday said it was “taking the necessary steps to immediately suspend operations” of its stores and website in the country.

Those firms remaining in Russia have come under increasing pressure to halt business there, including the Swiss food and drink group Nestlé. The Ukrainian president, Volodymyr Zelenskiy, criticized the company, which continues to sell “essential” products such as baby food, cereals and some pet foods in Russia, in a streamed speech to thousands of protesters in Switzerland’s capital of Berne on Saturday.

Nestlé has halted sales of “non-essential” items such as coffee pods to Russia and has said it does not make a profit on the goods it continues to market there.

Some prominent US and UK retail brands are still operating in Russia because they have been unable to force independent franchise operators to close down.

Burger King’s owner, Restaurant Brands International, last week said fast food restaurants were still operating with its brand because its former Russian partner had refused to shut down. Other companies in similar situations include the UK retailer Marks & Spencer and the hotel groups Accor and Marriott.

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