Emmanuel Macron gives Renault green light to resume car production in Russia

Emmanuel Macron’s government has backed the French carmaker Renault’s decision to buck the Western boycott of Russia by restarting manufacturing in Moscow.

The automotive giant behind the Clio and Kadjar models was forced to halt production last month over logistical problems caused by Vladimir Putin’s invasion of Ukraine.

However, Renault has been given the blessing of its largest shareholder, the French state, to continue operating in Russia despite a widespread backlash from western businesses.

Renault owns around two thirds of AvtoVaz, the Russian automotive manufacturer that makes around 400,000 cars a year under the Lada brand.

AvtoVaz brought its plants to a standstill in February after warning that Mr Putin’s assault on Ukraine would lead to a supply chain crunch caused by shortage of imported components.

In a statement at the time, Renault said its decision was caused by a “forced change in existing logistic routes”.

Lada is a corporate symbol of the Soviet era and remains Russia’s largest automotive company, which is still part-funded by the Kremlin. Only 10pc of Lada models are sold outside of Russia.

Renault had been gradually building its position in AvtoVaz since 2008, before taking control of a business in recent years that commands around 40,000 staff in Russia.

The French firm’s strong corporate ties make it harder for the company to cut loose its ties in Russia without suffering a significant financial hit.

Renault swung to a € 967m (£ 804m) profit last year after recovering from a € 8bn loss in 2020 when the pandemic ravaged the automotive sector. AvtoVaz sales rose by 10pc to € 2.8bn over the period.

The decision to keep its Russian operations intact comes after The Telegraph revealed that the French retail tycoons behind Decathlon have moved to expand across Russian despite the crisis in Ukraine.

Leroy Merlin, the home improvement firm owned by the Mulliez family, wants to fill the vacuum left by western rivals such as Ikea after they pulled out of Russia.

In a letter to suppliers, the bosses at the Russian arm of Leroy Merlin said that “sales have significantly increased” since the start of Mr Putin’s brutal military campaign.

A Renault spokesman said: “We are following the ongoing situation very carefully.”

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