French carmaker Renault has resumed manufacturing in its plants in Moscow, and calls for boycotts are spreading across the social media.
U.K. politicians and financiers were some of the first to call out Renault. Chris Bryant, a Labour Party member of parliament, who has also been campaigning for greater sanctions to be placed on Russian oligarchs, wrote on Twitter, “Renault resumes manufacture in Russia. It’s time we stopped buying them in the U.K.”
American-British financier and political activist Bill Browder, a long-time critic of Putin, echoed the same sentiments. The CEO and co-founder of Hermitage Capital Management, which at one time was the largest foreign portfolio investor in Russia, called Renault’s move “a big middle finger to the civilized world.”
The sentiments was also backed by Ukrainian leader Volodymyr Zelenskyy, who said in a video link to France’s National Assembly “Renault, Auchan, Leroy Merlin must stop being sponsors of the Russian war machine, stop financing the murder of children and women, of rape.” He added, “French companies must leave the Russian market.”
Renault, 15% of which is owned by the French state, suspended production at the Moscow plant last month, citing logistical problems after the invasion of Ukraine prevented trucks carrying crucial semiconductors from reaching the factories.
But the company has seemingly gotten over this small hitch, and according to Reuters with the backing of the French government is restarting manufacturing.
Renault’s Russian market power
Renault has outsized market power in Russia.
The French car brand gets around 10% of its revenue from Russia, controls a huge percentage of the country’s car market, and has been reluctant to pull out of the country, putting it at odds with most other Western manufacturers.
Volkswagen, Toyota, Mercedes-Benz and even Renault’s Japanese partner Nissan have all halted exports to the country, despite also holding considerable market power in the country. Volkswagen has the third largest share of the Russian car market after Renault and Hyundai, with 12.2% of the market, followed by Toyota which holds at 5.5%.
According to reports from Bloomberg, Renault has dawdled on cutting its ties with Russia as it fears the negative repercussions of pulling out of its AvtoVaz venture—the Soviet-era maker of Ladas and largest car manufacturer in Russia—which it has held a majority share in since 2008.
To muddle things further, Renault owns AvtoVaz along with Russian defense conglomerate Rostec, which is headed by Sergey Chemezov—a close Putin ally who has been sanctioned by Western governments. Rostec is also a majority shareholder in Novikombank, one of the seven lenders kicked off the SWIFT international payment network.
Renault’s popularity in Russia along with its majority stake in AvtoVaz has led to the company controlling a generous 30% of the Russian car market, employing around 40,000 people in the country. Bloomberg Intelligence estimates that Russia accounted for about €5 billion ($5.5 billion) of Renault’s revenue in 2021, and roughly €315 million of its operating profit.
But as its restarts its operations in Russia, Renault must face declining popularity in the West. Renault has lost nearly 30% of its market value in the wake of Russia’s invasion and the ensuing economic sanctions and future calls for boycotts put Renault in an even more precarious position.
Twitter boycott
People on Twitter have been quick to call for a boycott of the company.
Evocative graphics have been made.
And even Renault’s Alpine F1 Team has been brought down in popularity.
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