MercoPress. South Atlantic News Agency

Renault reopens plant in Moscow, after overcoming “electronic component shortages”

The company did not specify at the time whether the supply chain issues were due to the war in Ukraine

Carmaker Renault, partly owned by the French government, this week reopened its assembly plant in Russia, at a time when many international corporations are closing their businesses because of sanctions imposed on Moscow and public opinion pressure linked to the invasion of Ukraine.

A company spokesperson confirmed the reopening and resumption of activities. Renault had suspended some operations at its assembly plants in late February due to component shortages caused by logistical bottlenecks, according to reports from local units.

The company did not specify at the time whether the supply chain issues were due to the war in Ukraine. But sweeping Western sanctions against Russia have further damaged supply chains at a time when automakers are already struggling to get hold of the semiconductor chips used in many parts of car production. Precisely recent sanctions include a ban on semiconductor exports to Russia.

Renault assembles the Duster, Kaptur and Arkana models, and has a significant share of the Russian market.

“The situation with components supply is unstable and changing, we prefer not to make any predictions,” a spokesperson for Renault Moscow was quoted. Renault reopened its plant some 400 companies, including Apple, Coca-Cola, and McDonald's, have reduced or halted operations in Russia since the war began, according to researchers at Yale University in the US tracking the trend. Foreign carmakers like Germany's Volkswagen and Japan's Toyota have also suspended production and exports.

Renault has chosen to remain active in Russia for now while complying with international sanctions, and the decision had the backing of the French state, Renault's main shareholder.

Since 2016, Renault has had a controlling two-thirds stake in Russian carmaker Avtovaz, making it more exposed than its rivals to the Russian market. Over 36,000 people in Russia work for Renault. The country accounts for 8% of its core earnings, according to Citibank.

The French firm entered Russia in 2007, at a time when the car market there was booming. Avtovaz began as a state-owned manufacturer under the Soviet Union. Its Zhiguli and Lada brands have strong associations with the country's communist regime.

Lada, which produces primarily for Russia and its former Soviet neighbors, accounted for 21% of the domestic car market in 2021. Renault's controlling stake highlights the difficulties faced by the West as countries there try to isolate Russia economically.

While operations at Renault's Moscow plant have resumed, Avtovaz said on Monday that it is halting some production at its plants in the Russian cities of Togliatti and Izhevsk due to a shortage of electronic parts.