Renault RNO -0.04%

several horrible years have passed, culminating in an expensive exit from Russia, announced on Monday. But if this latest crisis finally forces the French carmaker – and its government shareholder – to reconsider the distribution of capital, everything can be forgiven.

Renault on Monday said it would sell its 68 percent stake in AvtoVAZ, Russia’s largest carmaker, supported by a Moscow-based research center as well as a local government plant in Moscow. For each asset will receive a token ruble, writes The Wall Street Journal. He has the opportunity to buy back his shares in AvtoVAZ within six years.

The company has made a big bet on Russia under former CEO Carlos Gon amid a broader focus on emerging markets. It eventually took a controlling stake in AvtoVAZ, the maker of the iconic Lada brand, as part of aid in 2016, as the Russian economy faltered from low oil prices and a previous round of sanctions. After many years of losses, the investment has finally paid off – AvtoVAZ received about 15% of Renault’s total operating profit in 2021 – when Russia’s invasion of Ukraine suddenly made it politically unprofitable.

Many of Renault’s previous problems have been related to tensions with its global partner Nissan.

NSANY 0.11%

When Mr. Gon was arrested in Japan in 2018, ties between the two companies he ran broke down. It is still unclear exactly what Renault is getting from its substantial but uncontrolled 43% stake in Nissan. In some cases, such as the discontinued merger with Fiat Chrysler in 2019, Nissan’s connection seemed a brake on bold thinking.

Thus, investors value Renault with an even greater discount on the amount of parts than most car manufacturers. Taking Nissan’s share of the market value, Renault shares are currently worth only $ 615 million.

The good news is that the company, led by new CEO Luca de Meo, finally seems motivated to address the issue. Last month, Bloomberg reported that Renault is considering selling part of its stake in Nissan to help fund the transition to electric vehicles. And last week the company said it was exploring the potential for new organizations for EVs and software, on the one hand, and non-French assets of engines and transmissions, on the other. Each of these companies will have about 10,000 employees out of 110,000 at Renault after leaving Russia.

Renault is valued by investors with an even greater discount on the amount of its parts than most automakers.



Many questions remain unanswered about how far these deals will go, what purpose they will serve and how they will fit into an alliance with Nissan. Last week, the Japanese company told reporters it needed to better understand the plan. Renault also seems to still be heavily controlled by the French government, which owns 15% of the shares. Among the few details revealed was the fact that the EV business (i.e. the future) will be located in France, while the traditional transmission business (past) will include assets outside France.

Despite all the uncertainty, it is clear that Mr. de Meo is serious about the Renault shock. The main goal would be to prepare the company for a completely different future. Whether it works or not, moving a portfolio can help reveal the value inherent in a company’s valuation in the stock market. Mr de Meo said he would talk more on strategy day this fall.

In recent years, Renault has become irrelevant to investors, but it may be a good time to start paying more attention.

The effects of tough economic sanctions against Russia are already being felt around the world. Greg Yip of the WSJ joins other experts to explain the significance of what has happened so far and how the conflict could change the global economy. Photo illustration: Alexander Khots

Write Stephen Wilmot at

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