PARIS -- Renault Group's decision to suspend activities in Russia – possibly leading to a permanent exit from its second-largest market – following the invasion of Ukraine carries both short- and long-term costs.
The immediate impact is likely to be around 2 billion euros ($2.2 billion) in charges from a write-off of Renault's plant in Moscow and its stake in the AvtoVAZ joint venture and reduced cash flow that will sap momentum from CEO Luca de Meo's budding turnaround plan for Renault.
The group has struggled since the November 2018 arrest of Carlos Ghosn, who was both CEO of Renault and chairman of the group's alliance with Nissan. The ensuing management turmoil came just as COVID-19 brought auto sales and production to a near-halt.
In the coming years, a full exit would quash de Meo's plans to build synergies between Dacia, the low-cost brand based in Romania, and Lada, which occupies a similar niche in Russia.