Renault suspends its operations in Russia, revises 2022 outlook

The decision was made in response to rising criticism of the French company’s prolonged participation in Russia since the country invaded Ukraine.

Renault SA, the Western automaker with the highest exposure to the Russian market, announced on Wednesday that it will halt operations at its Moscow facility while it considers its options regarding its majority interest in Avtovaz, the country’s largest automaker.

The decision was made in response to rising criticism of the French company’s prolonged participation in Russia since the country invaded Ukraine. Dmytro Kuleba, Ukraine’s foreign minister, has called for an international boycott of Renault.

“Renault Group reminds that it already implements the necessary measures to comply with international sanctions,” the business said in a statement issued on Wednesday, its first on the matter since the war began. The issue in Ukraine was not mentioned in the statement.

The French automaker reduced its operating group margin to approximately 3% in 2022, down from at or above 4% in 2022, and raised its automotive cash flow forecast to “positive” from a previous projection of 1 billion euros ($1.10 billion) or higher.

Ukrainian President Volodymyr Zelensky previously accused Renault of supporting the war, saying the company, along with others in France, must cease “financing the murder of children and women, of rape.”

On Wednesday, Kuleba said in a tweet, “I welcome @renaultgroup’s statement on the cessation of industrial activities in Russia. The responsible move against the backdrop of Russia’s ongoing barbaric aggression against Ukraine.”

According to Citibank, Renault obtains 8% of its core earnings from Russia, mostly through its 69 percent share in Avtovaz, the company behind the Lada automobile brand.

A decade ago, manufacturers regarded Russia as a bright growth market with the potential to be one of the top 10 vehicle-buying nations in the world. The current restrictions, as well as previous ones imposed in the aftermath of Russia’s annexation of Crimea in 2014, have dashed such hopes.

The French government has frequently stated that it is up to French firms to decide the future of their activities in Russia, as long as they comply with international sanctions.

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