Renault’s Russia dilemma
Renault had for months been plotting to export a newfangled version of the Lada to the reste of the world. although realising that ambition remained some way off, it would have capped the revival of a brand arguably more synonymous with the Soviet Union than any other and which Renault first took a punt on in 2007 after then chief Carlos Ghosn identified Russia as a promising market.
Encouraged by Russian president Vladimir Putin, Renault in 2012 lifted its stake in Avtovaz, the manufacturer of the Lada since the first one rolled off the production line in 1970, to a controlling one.
A decade on, its success in steering Lada through setbacks and market slumps has left Renault with a larger business in Russia than many other foreign companies, just as Putin's invasion of Ukraine risks turning the country into a pariah state.
French companies are among the biggest foreign employers in Russia, with 160,000 local stuff in total, according to French officials. Food producer Danone, supermarket group Auchan, DIY retailer Leroy Merlin and lender Société Générale also have large operations.
"The questions of wether these companies should leave [Russia] is certainly there," said Tatiana Kastouéva-Jean, the head of the Russia centre at French think-tank Ifri. "Some French companies have been resisting more than others, but many are more local and have more to loose."
Nevertheless, Renault's shares have underperformed other Frenc blue-chip companies since the invasion, falling by more than 20 per cent.
Its Russian dilemma risks weighing on De Meo's broader ambitions at Renault after the company, hit by corporate scandals and then the disruption from the coronavirus pandemic, only edged to profit last year after two years of losses.
> Full article available on the Financial Times.