The era of renaissance: foreign car companies want to return to Russia

Foreign automobile companies that left the Russian market three years ago are now considering the possibility of returning to our country. Some firms have already done so, while others are only hatching such plans. Izvestia found out how likely the arrival of "new old" car brands is and what their prospects are in Russia.

"We are business people."

French automaker Renault has not ruled out a return to the Russian market. This was stated by the CEO of the company Luca de Meo, reports the Financial Times. He noted that buying out a controlling stake in AvtoVAZ is not a priority, but the management of the French brand is open to discussing business opportunities.

"I would rather focus on building the future than catching up. But we are business people. When we see a business opportunity, we try to take advantage of it <...>. I haven't thought about that scenario yet because the situation is developing so rapidly. Let's see how it goes," Luca de Meo said when asked about the possibility of Renault returning to Russia.

The French manufacturer sold its Russian business and its stake in AvtoVAZ (about 68%) almost three years ago, in May 2022. At the same time, the company has an option to buy back its stake within six years. The CEO of the French automaker recalled that when Renault left the Russian Federation, its shares fell by 30-35% in just two weeks.

At the end of the first half of 2022, the French company incurred a loss of €2.3 billion.

Against the backdrop of Luca de Meo's statements, AvtoVAZ said it is not currently in talks with Renault.

- "AvtoVAZ currently has no contacts with its former partner," the Russian automaker's press office told Izvestia.

No hugs

The day before, the South Korean automaker SsangYong returned to Russia under the new brand KGM. Already in March, sales of three crossovers of this brand will start in our country, and in the fall a frame SUV will appear on the Russian market. It is also planned to start production of KGM cars at Avtotor automobile plant in Kaliningrad region in the fall.

Earlier in the South Korean media there was information that Hyundai Motor concern is considering the possibility of buying back the enterprise near St. Petersburg. It is expected that the final decision on this issue will be made by the end of this year. At the same time, the South Korean company has left itself in advance the possibility of returning to the Russian market, having re-registered in Rospatent in August last year the rights to the Hyundai trademark in our country.

The Russian government is cautious about the prospects of returning to our market the brands that have left. According to First Deputy Prime Minister Denis Manturov, Russia will admit to its market those companies in which it is interested.

"During the time when the sanctions packages were formed one after another, the system of preferences in state procurement has seriously evolved, as well as the system of support measures - today, domestic manufacturers, as well as manufacturers from the EAEU, have absolute priority in the sectors that are crucial for our technological sovereignty," TASS quoted the First Deputy Prime Minister as saying.

The Western car industry, which left Russia, is not expected to return "with open arms", said Anton Alikhanov, head of the Ministry of Industry and Trade, at the Future Technologies Forum. He emphasized that the industry as a whole has received huge opportunities for development. "So we see this as an opportunity for development," Anton Alikhanov said.

Divide by ten

Maxim Kadakov, editor-in-chief of Za Rulem, is skeptical about the prospects of Renault's return to our country.

- I personally know Luca de Meo, and I can say that all his words can be safely divided by two, or even by ten. In any case, there will be many more statements and arguments on this topic," Maxim Kadakov said.

According to him, Russia does not really fit into the current strategy of Renault on electrification of the model range. When our market "fell off", some people in France even breathed a sigh of relief, noted the chief editor of "Za Rulem". He reminded that Renault has no right to buy back the Moscow plant "Moskvich", but retains the right to buy back its share in AvtoVAZ. It is obvious that they will be allowed to get back this share on such conditions, which the French will hardly like, believes the auto expert. At the same time, Russia has a certain interest in the return of the French automaker, he notes.

- Through the French it is possible to "bring" the production of heavy components, with which we still have certain difficulties: from modern turbo engines to gearboxes for four-wheel drive vehicles and good gearboxes, - says Maxim Kadakov.

According to Igor Morzharetto, partner of the analytical agency Avtostat, if foreign car companies really decide to return to Russia, it may take quite a long time.

- All car companies want to return to the Russian market, it is potentially very promising. Another thing is that neither of these organizations has the opportunity to do this now. There are sanctions against our country, and under the current conditions any returning brand automatically falls under them," Igor Morzharetto told Izvestia.

At the same time, the expert emphasizes that from the economic point of view, the return will make sense only if car companies will produce their models in our country. Otherwise, cars imported from abroad at the expense of customs duties, excise duties and recycling fee will be noticeably more expensive than local models, he emphasizes.