- Renault’s former partner in Russia said the French carmaker may need to pay $1.3 billion to re-enter the market.
- Renault exited Russia in 2022, selling its assets for one ruble amid Western sanctions.
- Foreign firms face challenges returning to Russia, with potential compensation demands looming.
Renault exited the Russian market in 2022, selling its assets for a single ruble.
Now, the French carmaker may need to pay 112.5 billion rubles — about $1.3 billion — if it seeks to return after the war, its former Russian partner Avtovaz said. The stipulation is a sign that foreign firms looking to return to the market could face high compensation demands.
In the case of Renault, Maxim Sokolo, the CEO of Avtovaz, said the company and the Russian state have invested 112.5 billion rubles in the business since its exit through 2025.
“It is clear that these investments will have to be reimbursed somehow upon return,” Sokolov said, according to TASS state news agency.
American President Donald Trump has signaled a willingness for the US to reconcile with Moscow, spurring recent discussions about a potential return of Western businesses — such as Renault — to the market.
In 2022, Renault sold its 67.6% stake in Avtovaz to the Russian state with the option to buy back its assets within six years. The automaker took a 2.2 billion euro writedown from the exit from the market that was its second largest, after France.
A spokesperson for Renault told Business Insider said the company doesn’t “foresee any change for the short term” when it comes to a return to business in Russia. The company did not comment on Sokolov’s statements.
David Szakonyi, an associate professor of political science and international affairs at George Washington University, told Business Insider that Sokolov’s about compensation should be taken seriously, even if Russian officials are also posturing.
The exit of foreign businesses created winners at home in Russia, some of whom picked up assets at fire sale prices.
“Freely allowing foreign companies back in is going to diminish their profit streams and make life a lot more competitive, so if that is going to happen, Russia wants some kind of compensation for liberalizing its market,” said Szakonyi, who is a specialist in Russia’s political economy.
‘Even more confident, even more emboldened’
Sokolov’s comments echo others in Russia recently signaling tough negotiations for departed companies that wish to return.
Anton Alikhanov, the Russian industry and trade minister, told reporters on Thursday that Russia is “not waiting for anyone with open arms” and that there will be “a price to pay for past decisions.”
Russia is likely to continue with such “cocky rhetoric” amid its rapprochement with the US, Szakonyi said.
“It feels that it survived just about the worst the West could throw at it and persevered through that adversity and now comes out even more confident, even more emboldened, to make demands on the West and dictate the terms of both political and economic dealmaking going forward,” he added.
Three years into the war in Ukraine, 475 foreign companies have left the Russian market completely, per the Leave Russia database from the Kyiv School of Economics.
Fast food giant McDonald’s and coffee chain Starbucks were two high-profile brands that left the market, with their assets bought by Russian businesses. McDonald’s rebranded to “Tasty and that’s it” and Starbucks became Stars Coffee.
Western companies are not clamoring to go back to Russia
Even though Russia is a large market, analysts have said recently that businesses are likely to be cautious about returning to the country, even if sanctions are lifted.
Russia’s wartime economy is facing problems including high inflation, currency volatility, and sky-high interest rates. President Vladimir Putin’s ironclad reign presents concerns about the rule of law and safety.
“While Russia says it’s open to doing business again, it didn’t actually signal any change of tone or policy,” said Szakonyi, who added that much of Moscow’s rhetoric is likely aimed at the Trump administration’s appetite for dealmaking.
Investors are also likely to remain wary after a wave of corporate nationalization and asset seizures in the last few years that redistributed international company wealth to the Russian state and oligarchs.
Szakonyi said Russia has proven that business property rights protections, investor guarantees, and a hospitable business climate are things of the distant past.
“Without them in place, I see no reason why Western companies would risk again with Russia as such a volatile, unpredictable regime,” he said. “It has proven that it doesn’t care about property rights and that it talks out of both sides of its mouth and is not trustworthy.”
