Renault sells AvtoVAZ stake, but may return

Renault will sell its majority stake in AvtoVAZ to a Russian science institute, the automaker said, adding that the deal included a six-year option to buy back the stake.

The Western automaker most exposed to the Russian market said that its holding of nearly 67.69 percent in AvtoVAZ, which makes Lada cars, would be sold to the Russian Central Research and Development Automobile and Engine Institute, called Nami.

"The closing of these transactions is not subject to any conditions, and all required approvals have been obtained," Renault said in a statement on Monday.

Its 100 percent shares in Renault Russia, which operates a plant in Moscow, will go to the city of Moscow.

"Today, we have taken a difficult but necessary decision, and we are making a responsible choice towards our 45,000 employees in Russia," CEO Luca de Meo said in the statement.

The move preserved the group's performance and its ability to return to the country in the future in a different context, he added.

The company, which is 15 percent owned by the French state, confirmed a non-cash writedown of nearly 2.2 billion euro ($2.29 billion) to reflect the potential costs of suspending operations in Russia.

De Meo has been clear about the French carmaker's desire to return to Russia after the war in Ukraine is resolved and normal relations are eventually restored.

The AvtoVAZ factory at Togliatti may build Renault Duster cars under the Lada brand, Denis Pak, head of the car industry department at the Industry and Trade Ministry, said in a televised interview with Rossiya-24.

He said an agreement was reached with Renault.

Renault was not immediately available to comment.

Moscow Mayor Sergei Sobyanin said that in order to preserve thousands of jobs, Renault's plant in the city would be used to restart production of the Soviet-era Moskvich brand.

The Moskvich, which translates as a native of Moscow, ceased production around two decades ago.

Sobyanin said Moscow was working with truck maker Kamaz and Russia's Industry and Trade Ministry to localize as much vehicle component production in Russia as possible.

Pak said Moskvich production was expected to start this year.

The Moscow plant will be renamed Moscow Automobile Factory Moskvich, he said.

Two sources familiar with the situation told Reuters that Renault Russia and the AvtovVAZ stake were sold for a symbolic one ruble ($0.016) each.