APU down the drain: military contracts will close the way for the European automotive industry in the Russian Federation

European automakers involved in military-technical cooperation with Ukraine risk losing the Russian market forever. The Russian government will not allow companies that supported Kiev to return to the country, Alexander Shokhin, the head of the Russian Union of Industrialists and Entrepreneurs, told Izvestia. The State Duma can work out specific criteria for such cases. Renault, for example, may well fall under them; by launching drones, this manufacturer has effectively deprived itself of the prospects of returning, the Russian embassy in Paris told Izvestia. And although calls for dialogue with Moscow are becoming louder in Europe, experts warn that the process of restoring investment projects with the West will be a long one. The problems that Western businesses will face if they return are described in the Izvestia article.

European automakers will not be able to return to Russia

Since the outbreak of the conflict in Ukraine, most foreign automakers have chosen to leave the Russian market in a hurry. To avoid problems at home and comply with the sanctions regime, the companies have fully sold their assets inside the Russian Federation. Although some of them have formally left themselves a "window" for return, primarily through asset repurchase options. However, the existence of a legal loophole does not guarantee their resumption of work in the country.

"The criteria for the return of companies are not clearly legalized, but nevertheless a lot is said about them: those who are involved in military-technical cooperation and support for Ukraine, by definition, will not be allowed in by the deputies and the government," Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs (RSPP), told Izvestia.

Photo: IZVESTIA/Andrey Erstrem

Apparently, it is only a matter of time before rules appear for those who want to resume work in Russia. The State Duma may do this in the near future.

— I think there will be certain criteria. This includes questions about how companies behaved during the period of sanctions pressure. I think this will definitely be taken into account," Alexander Spiridonov, deputy chairman of the State Duma Committee on Industry and Trade, told Izvestia.

Substitution therapy: how is the production of automotive components developing in Russia

The production of domestic components for the automotive industry has begun in Kaliningrad and Murom.

The parliamentarian stressed that military-technical cooperation and support for Ukraine will become an unambiguous "red line" in this matter. The relevant criteria will be developed by the relevant committees responsible for the economy and industrial production. However, most of the economic sanctions must be lifted to get started, the deputy concluded.

Many European corporations were seriously counting on returning to Russia. The French Renault, for example, retained the right to buy back its facilities when selling its stake. Back in February 2025, the then CEO of the company, Luca DeMeo, admitted in an interview with the Financial Times that he considered returning to the Russian market as a commercial opportunity that the business did not intend to miss.

Photo: IZVESTIA/Pavel Volkov

However, in October, the company was included in the Russian government's sanctions list, which means that transactions with it are now prohibited. The reason was the automaker's direct involvement in defense initiatives to support Ukraine. In February 2026, it became known that Renault had also joined the production of military drones in partnership with the French defense company Turgis Gaillard.

"The involvement of the French automotive industry, in particular the once successful Renault civilian enterprise, in the production of military products clearly demonstrates the rapid militarization of the French economy," the Russian Embassy in France explained to Izvestia. — By fulfilling such orders, Renault's management effectively deprives its company of the prospects of returning to the Russian market.

The case of Renault, the diplomats stressed, clearly demonstrates the macroeconomic concept of "guns instead of butter," describing the limited production capacity when choosing between military and civilian production. It also becomes a symbol of the policy of the state, which is preparing for aggression to the detriment of the welfare of its own people, the embassy concluded.

Photo: Global Look Press/Soeren Stache

The European military-industrial complex tried to "push through" the German car industry. In April 2025, it was claimed that the German defense concern Rheinmetall intended to establish a joint production of bulletproof cabins for trucks at the Volkswagen plant in Osnabrück. It is worth noting that the German brand sold its enterprises in the Russian Federation back in 2023, but is trying to remain on the Russian market, for example, through Chinese FAW models based on the popular Jetta.

Will economic ties with the West resume

Despite Ukraine's demonstrative support, it is from Paris that signals are increasingly being heard about the need to restore contacts with Moscow. In early February 2026, French President Emmanuel Macron mentioned working at a "technical level" on a possible resumption of dialogue with Vladimir Putin. The Russian side has so far confirmed only the restoration of contacts between the capitals at the technical level.

Auto substitution: Chinese automakers are losing the Russian market

Sales of new cars in Russia have stopped their growth

Similar sentiments are gradually spreading to other EU capitals: some leaders fear that without direct negotiations, Europe will completely lose its influence on the settlement of the Ukrainian conflict. Although there is no need to talk about any significant role of Brussels. At the recent talks in Geneva, European representatives remained outside the main negotiation process, content, according to media reports, with behind-the-scenes contacts.

Participants of the trilateral meeting of the delegations of Russia, the United States and Ukraine in Geneva

Photo: REUTERS/National Security and Defense Co

In addition to France, Italian Prime Minister Giorgia Meloni also spoke publicly about the need to talk with Moscow: at a January press conference, she even suggested appointing an EU special representative for contacts with Russia.

The Kremlin has repeatedly stressed that Moscow does not abandon contacts with Western countries. The Russian Federation is ready to discuss, among other things, more profitable business processes. In particular, presidential spokesman Dmitry Peskov recalled that Russia allows the use of the dollar in settlements with the United States if Washington lifts restrictions and the currency remains an attractive instrument.

If the Americans begin to lift sanctions, Europe will most likely follow their example, says Georgy Ostapkovich, head of the HSE Center for Economic Studies. However, the rapid return of European automakers that were not included in the sanctions lists of the Russian Federation should not be expected.

Photo: Global Look Press/Christian Ohde

"They lost a lot of money: they imported equipment and spare parts, localized production, and then actually had to sell assets at a minimum price," the expert emphasized in a conversation with Izvestia. — If they find it possible to return, they will probably return, but it is a long process.

Companies operating in the "bought-sold" (resale) format can return to Russia most quickly with the easing of restrictions, Georgy Ostapkovich concluded. While the resumption of investment projects — local assembly, production and large investments — is an extremely lengthy process.