McDonald’s and Renault announce permanent departure from Russia

The American fast food group McDonald’s, which closed its establishments in Russia in early March, announced this Monday (16) that it will leave the country for good and will sell all its operations. The decision is a reaction to the invasion of Ukraine.

France’s Renault also confirmed on Monday that it had sold its assets in the country to the Russian state, in the first significant nationalization since Moscow’s offensive in Ukraine.

“We are committed to our worldwide community and must remain uncompromising in our values,” group CEO Chris Kempczinski said in a company statement.

“Respecting our values ​​means that we cannot keep McDonald’s in Russia,” he added.

The company announced the temporary closure of all its establishments and the suspension of its operations in the country on March 8, following in the footsteps of other multinationals that distanced themselves from Moscow.

Present in the country for over 30 years, McDonald’s has 850 restaurants and 62,000 employees. Russia represented, until then, 9% of the company’s total revenue and 3% of its operating profit.

In a statement, Renault said it had ceded its majority stake (67.69%) in AvtoVAZ, the largest Lada car maker in Russia, to the Russian Institute for Research and Development of Automobiles and Engines.

Thanks to AvtoVAZ, Russia was, last year, the second largest market for the Renault Group, behind Europe, with around half a million vehicles sold.

Financial details were not released, but Russian Industry and Trade Minister Denis Manturov said in April that Renault planned to sell its Russian assets for “a symbolic ruble”.

“Agreements have been signed on the transfer of Russian assets from Groupe Renault to the Russian Federation and the Moscow government,” the ministry said in a statement.

The French auto group also ceded Renault’s Russian operations to Moscow, including the factory near the capital that produced Renault and Nissan vehicles. Mayor Sergei Sobyanin announced that the factory will relaunch the Soviet brand Moskvich.

Renault’s management had already announced that it would include in its accounts for the first half a charge of 2.2 billion euros (about R$ 11.6 billion) as a result of this sale.

In 2008, Renault had committed to Avtovaz to become a majority shareholder in 2014, under the direction of Carlos Ghosn.

After strong investments and the transfer of technology to Dacia, Renault’s low-cost brand, Avtovaz started to turn a profit.

Agreements made on Monday maintain the possibility that Renault will re-acquire the Russian subsidiary for six years.

“Today we have taken a difficult but necessary decision and we are making a responsible choice for our 45,000 employees in Russia, while preserving the Group’s performance and our ability to return to the country in the future, in a different context” , said Renault CEO Luca de Meo in a press release.

Avtovaz produces vehicles at its gigantic plant in Togliatti (southwest), which employs 35,000 people.

With the conflict in Ukraine, the Russian market collapsed, and the group’s factories began to operate at reduced capacity, stopping in some cases, due to the shortage of components due to the imposition of Western sanctions on the country.