The Renault factory is a modern, medium-sized plant located in the south-east of Moscow, on the third transport ring road. And it is the linchpin of a story that shows how difficult it is to draw a clean line between the Western car companies and the Russian economy.
Even if everyone adheres to the sanctions rules imposed in the West after the start of the aggressive war against Ukraine. Because in the globalized industry, practically everything is connected.
It is therefore considered likely that cars will be built in the previous Renault plant in Moscow in the future, the technology of which was developed with know-how from the German Volkswagen Group. Although there will be no direct connection to VW, there will be close partners of the automotive giant from China.
Only from there can Russian manufacturers obtain the technology for new vehicles, so-called platforms. Experts had already pointed this out at the beginning of the sanctions.
The level of development of the Russian industry is therefore not sufficient to quickly set up a new automobile production in Moscow. Renault models such as Kaptur and Arkana can no longer be built in Moscow after the French left Moscow.
The city now owns a complete plant employing more than 1,700 people, but no longer has access to the components and rights to the vehicles previously built there. The Mayor of Moscow, Sergei Sobyanin, had announced that he therefore wanted to revive the Soviet brand Moskvich, which went under 20 years ago.
Such a change can only be made quickly by building on the basis of an existing vehicle, one from China.
According to a report by the Reuters news agency, there are already talks between the Russian truck manufacturer Kamaz, which is to continue operating the Renault plant, and the Chinese group JAC. The newspaper Vedomosti also reports on a possible technology partnership with the car manufacturer FAW from China. The companies left inquiries about this unanswered.
Both groups, JAC and FAW, are closely linked to Volkswagen in the People’s Republic. In joint ventures with them, the Germans have been producing VW vehicles in China for decades. The engineers and managers of the partner companies have learned a lot from them over the years. Both JAC and FAW have long been building their own vehicles outside of the VW partner companies, on their own technology platforms.
The group in Wolfsburg is keen to draw a clear line between these car brands: “Neither JAC nor FAW use Volkswagen technology for their own products,” says a VW spokesman. And both companies will not allow themselves to be interfered with in their decisions.
Despite close partnerships with Western companies: the state is in charge at JAC and FAW. Ultimately, the Communist Party decides whether and how to help the Russians. President Xi Jinping has not yet distanced himself from his Russian ally Vladimir Putin.
If Kamaz in Moscow manages to restart the Renault factory with a new model, it could become a risky blueprint for other plants in Russia. Especially for the ones from Volkswagen.
The manufacturer stopped production in Kaluga and Nizhny Novgorod at the beginning of March, and the 7,000 employees in Russia will continue to be paid. However, a resumption of production is not to be expected for the time being. Even if you wanted to, there would not be enough components because the supply chains have collapsed, argues VW.
One argument against expropriation by the Russians is that the works are designed on VW platforms, which would then no longer be delivered. The group assesses the risk and the previous damage with a “middle three-digit million amount”, according to the report on the first quarter.
The domestic competitor Mercedes-Benz is more specific: It estimates the “expenses in connection with adjustments to business activities in Russia” at 709 million euros. In addition, there is an unpleasant connection for Mercedes in the figures: the automobile group still owns a 15 percent stake in Kamaz – the company that will probably play the key role in Moscow and that, among other things, manufactures military vehicles.
Breaking away from involvement seems difficult. In the course of splitting up the group, it was to be transferred to the now independent truck division. “When the regulatory framework is in place, the stake will be transferred to Daimler Trucks,” said Mercedes CFO Harald Wilhelm at the end of April.
That doesn’t sound like the painful cut with which Renault boss Luca de Meo separated from the Russian business. For no European manufacturer was this market as important as for the French.
In addition to the factory in Moscow, Renault primarily owned a majority stake of 67.7 percent in the Lada manufacturer Avtovaz. In terms of sales, the Renault Group was the market leader in Russia, almost half of the profits in the automotive division came from there last year, and CEO de Meo actually wanted to bring the Lada and Dacia brands closer together. That has now been settled, Renault had to give up its stake in Avtovaz to a state institute – with the option of being able to buy it back within six years.
The Russian disaster has torn a hole of 2.2 billion euros in the balance sheet of the already ailing automotive group. From a Russian perspective, Lada could become the lifeline of its own industry. The wagons are not Western products, and the supply chains are largely local. The new boss, Maxim Sokolov, told a Russian news agency that production should resume in early June.
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