Renault concludes financial restructuring of Russian Avtovaz
As a second step in the financial restructuring of the Russian car manufacturer Avtovaz (part of the Alliance Renault-Nissan-Mitsubishi) there is a recapitalization for an amount of 107 billion roubles (1,3 billion euro). Lada being the number one car brand in the country, wasn’t making money upon 2017 with still a loss of 9 million euro, but is to be profitable from 2018 on.
The last stage of this recapitalisation will be carried out in October of this year, when Rostec (a public holding and major shareholder of Avtovaz) will invest a final 20 billion roubles (253 million euro) in Avtovaz without increasing his share.
In 2014 there was a heavy economical crisis in Russia with the local car industry suffering severely. The factory in Togliatti (Volga area) already lost half of its workforce in the first big crisis in 2008-2009. Sales went down dramatically from 3 million to 1,42 million units in the period 2012-2016.
But a new era seems to begin. Car sales are catching up in a more optimistic Russia (+ 13,9% in March) and Avtovaz is the number one on the market, with sales also up 22% in the same month.
Renault master of the game
The restructuring means that the share of the co-enterprise Renault-Nissan and Rostec will rise to 83,5% (against 64,6% before). In this co-enterprise Renault has a part of 61,1%.
“The whole restructuring, which was done during several years, is the biggest transaction in Russia’s industrial history”, says Sergei Tchemezov, head of Rostec. “More than 100 billion roubles have been invested in the redevelopment of the brand Lada and the factory in Russian Togliatti.
Since the beginning of 2017, just when things started going better, Renault integrated Avtovaz in his financial results. In 2017 Avtovaz already sold 11,9% more cars, resulting in a total of 1,595 million units. The brand didn’t make money yet (a loss of 9 million euro in 2017), but in 2018 it should write in the black again.
Renewal of the model line up
Of course it was the know-how and the long breath of Renault that saved Avtovaz. That’s on of the reasons a Frenchman, Nicolas Maure, is the company’s CEO at the moment. Lada is completing a whole renewal of the model line up.
Nevertheless, the Russian authorities keep a close eye on the events. In 2016 they asked Renault to fire their CEO Andersson because he was causing a social disaster. But in the end, Russia seems to work out for Renault, where everybody hopes that recent political events don’t mess up things again.