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18 March 2025

Renault Faces Strict Conditions For Possible Return To Russian Market

First Deputy Prime Minister outlines requirements for Renault's return amid shifting economic dynamics

Renault, the French automotive giant, faces strict conditions should it wish to return to the Russian market, according to First Deputy Prime Minister Denis Manturov. This statement, made during recent discussions, outlines the hurdles Renault must overcome to reintegrate successfully.

Renault had initially exited the Russian market back in 2022, transferring its 67.69% stake in AvtoVAZ to the Russian state for the symbolic price of one ruble. The exit agreement included provisions for Renault to repurchase its share within six years, but now these negotiations hinge on the fulfillment of several requirements.

"Such an option was originally stipulated in the signed exit agreement, and the option remains, but there were many conditions for maintaining this option, including compliance with the supply of components and the preservation of the digital control system," Manturov explained, emphasizing the need for Renault to prove its compliance with the original agreement.

The next steps involve AvtoVAZ reviewing if Renault met its obligations. If Renault demonstrates compliance and expresses intent to reenter the market, officials will also take note of the investments made by the Russian state during Renault's absence. This financial aspect could impact the future negotiations.

Maxim Sokolov, the president of AvtoVAZ, underlined the financial stakes, noting, "for the French company Renault to return to the Russian market, it will have to compensate for the funds invested over the last few years, totaling 112.5 billion rubles." This highlights the complex relationship between foreign investments and state interests within the Russian automotive sector.

Meanwhile, Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RSPP), weighed in from the perspective of domestic companies. Addressing the RSPP congress on the same day, he urged the necessity of protecting Russian businesses, which have successfully filled many previously vacated market niches. Shokhin asserted, "We are not going to give them up to returnees. It is important to form conditions under which foreign companies will return, as well as predict mechanisms for admission and protection of domestic businesses solving import substitution problems."

Shokhin sees the return of foreign businesses not merely as an opportunity but as a potential threat to the Russian firms now solidifying their hold on the market. He emphasizes the delicate balance between reopening avenues for foreign investment and ensuring the growth and sustainability of local enterprises.

The necessity to develop protective mechanisms for domestic businesses underpins the current discourse. Industries across Russia have adjusted to operate within the constraints of international sanctions, and many companies are vehemently opposing any return of their foreign counterparts without protective measures.

The dynamics surrounding Renault's potential return encapsulate the broader themes of sovereignty, economic resilience, and competition within the shifting Russian market. With increasing domestic capabilities, experts predict any transition back to foreign control of certain market segments could be met with significant resistance or additional negotiations.

Overall, this situation highlights the tension between foreign investment and the preservation of national industries. With Renault’s fate hanging in the balance, the coming months will undoubtedly shape the future of the Russian automotive industry and its relationship with global markets.