Renault is selling its entire Russian operations, including its stake in Lada maker Avtovaz, for 2 roubles, in one of the most significant retreats by foreign companies since the invasion of Ukraine.

The French group’s exit, which involved a 2.2 billion euro write-down and the sale of its Russian operations to a state-backed group and the city of Moscow, underscored the lack of options for businesses trying to leave the country without incurring huge losses. invest.

Chief executive Luca de Mayo told the Financial Times last week that the decision to leave Russia was “painful” but the company was “forced to make a decision” because it could not produce cars in the country.

Renault employs 45,000 people in Russia, mainly at its sprawling Togliatti plant in Avtovaz on the banks of the Volga River. It is more vulnerable to the country than its rivals, and a lack of parts has brought business to a halt.

De Meo told the Financial Times Future Car Summit last week that the company was “looking for a solution, [people] to keep their jobs into the future.”

The deal involves the transfer of the company’s entire stake in Renault’s Russian operations to the city of Moscow and its 67.69 percent stake in Avtovaz to state-backed automotive research agency NAMI.

The sale also provides Renault with a six-year buyback option for the business, which was traded at one ruble per share, according to people familiar with the matter. At current exchange rates, 1 US dollar is 64 rubles.

Renault owns 15 percent of the French government.If the company does not withdraw from Russia, “its sales [there] The French Economy Ministry said.

Russia accounts for about 10 percent of Renault’s sales and half of its operating profit.

International businesses, from oil companies to banks, have struggled to find ways to get rid of Russia, and many are simply suspending operations for now. This method allows them to pay employee wage bills but has little or no income in the country. At the same time, buyers are scarce and dealing with sanctioned Russian entities poses problems.

British Shell last week agreed to sell its retail and lubricants business in Russia to Lukoil, the first big deal in the oil and gas industry. French bank Société Générale took a 3.1 billion euro writedown by selling its Rosbank network to a group controlled by oligarch Vladimir Potanin.

McDonald’s said on Monday that it would sell outside Russia and hope to find local buyers to hire its workers.

Renault’s joint venture in Russia is part of its expansion strategy in emerging markets. Its first investment in the country was encouraged by Vladimir Putin in 2007.

It spent years modernizing and improving operations at some of Avtovaz’s Soviet-era facilities until the war had wanted to expand exports of new Lada models.

Moscow’s mayor, Sergei Sobyanin, said in a blog post that Russia will resume production of Moskvitch cars – a Soviet-era car brand dating back to 1946 – to keep the Renault factory working. They will be produced with Russian truck maker Kamaz, Sobyanin said, and find and build parts with government help.

Renault’s exit from Russia comes as the company races to invest in electric vehicles as the manufacturer positions itself to produce low-emission vehicles.

The company has cut its 2022 operating margin forecast to 3% from 4% and stuck to its financial guidance on Monday.

Additional reporting by Nastassia Astrasheuskaya in Riga