Renault to teach Western companies a lesson about leaving its market

Renault Company 

Now the French carmaker may have to pay 112.5 billion rubles - about $1.3 billion - if it wants to return to the market after the war, its former Russian partner AvtoVAZ has said. The situation is a sign that foreign companies seeking to return to the market may face high compensation demands.

In Renault's case, AvtoVAZ CEO Maxim Sokolov said the company and the Russian government have invested 112.5 billion rubles in the business from its launch to 2025.

"Clearly, these investments must be returned in some way," Sokolov said, according to state news agency TASS.

Trumph Effects

US President Donald Trump has indicated that the US is open to reconciliation with Moscow, sparking recent discussions about bringing Western companies such as Renault back to the market.

In 2022, Renault will sell its 67.6% stake in AvtoVAZ to the Russian state, with an option to buy its assets within six years. The carmaker lost 2.2 billion euros as it exited a market that was its second-largest after France.

A Renault spokesperson told Business Insider that the company "does not see any changes in the short term" regarding a return to its business in Russia. The company did not comment on Sokolov's statement.

David Sacconi, associate professor of political science and international affairs at George Washington University, told BI that Sokolov's comments about compensation should be taken seriously, even if Russian officials are making similar claims.

The exit of foreign companies has created winners in Russia itself, some of which have acquired assets at bargain prices.

"The free withdrawal of foreign companies would reduce their sources of profit and make life more competitive, so if that happens, Russia would want some compensation for the liberalization of its market," said Sakoni, an expert on Russian political economy.