Two auto companies will have to live together hours, days and possibly months of tension due to the Russian invasion of Ukraine. This is the Renault Group and AvtoVAZcompany that controls the brand She gives it: the first owns 67.61% of the second, and in this moment, with important penalties to be imposed to Vladimir Putin and to the economy of the gigantic Eurasian state, it is easy to imagine that there is a lot of attention on what can be produced in the future.
AvtoVAZ has been part, since January 2021, of the same business unit that also deals with Dacia. It is a brand that has long been deeply integrated into the Renault system and therefore it will be difficult to predict what will happen with the sanctions. Will Renault be able to continue operating in Russia without economic retaliation? Will there be exceptions due to the majority of the shares in French hands? Will the Russian authorities leave full operations to the workers to guarantee activities in the Russian and neighboring markets where Lada is present? For now, the questions are all hanging on the thread of events, and no longer on diplomacy as this road has collapsed.
On Tuesday, before Russia officially brought men and weapons into Ukrainian territory, CEO Nicolas Maure explained that in the event of sanctions related to the import of semiconductors, AvtoVAZ would set up alternative supplies. In particular, the relationship with China – the only major power that has not yet strongly condemned the Russian attacks in Ukraine – could remain active, given that the Asian country is also among the leaders in the field of electronics. But it is clear that there will be something to tweak, as the sanctions package promised to Putin could be far-reaching.
According to Reuters, “a senior source from the Russian auto industry expressed concern about how chip delivery times and new pre-orders could be affected, with hefty penalties“. AvtoVAZ sells over 90% of its production locally, while the remaining share of the market is split between Moldova, Georgia and Kazakhstan in particular. In 2021, however, corporate results had improved. Shares in Renault have plummeted since mid-February, and in the generally negative stock market scenario, the direct, and now uncomfortable, relationship with a company that produces on Russian soil does not go unnoticed.
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