French automobile manufacturer, Groupe Renault, is reportedly resuming operations at its Moscow plant with backing from its primary shareholder, the French government. The company had suspended production at the plant in February following logistical issues due to the Russia-Ukraine conflict.
According to reports, the carmaker has bigger operations than most of its European rivals in Russia, owning a two-thirds stake in Russian car manufacturer, AvtoVAZ, which sold over 350,000 vehicles last year and made £156 million ($207 million) in profits before taxes, accounting for 12% of Renault’s earnings in 2021.
Renault’s decision to restart production severely undermines the efforts made by major corporations and global brands to isolate Kremlin from the rest of the world by suspending operations in Russia.
Authentic Brands Group (ABG), the parent company of Reebok, recently announced that it was taking necessary steps to suspend operations in Russia. The brand operates around 90 stores in the country and has been highlighted as one of the several Western brands taking slow action.
Recently, Swiss food and beverage giant, Nestlé, was criticized by Ukrainian president Volodymyr Zelenskiy as the brand continues selling essential products in Russia, such as baby food, breakfast cereals, and pet food.
The brand has ceased the sale of non-essential products, such as coffee pods, in Russia and has stopped advertising support as well, meaning that it will not make a profit on its goods being sold in Russia. It stated that even though it is supplying important foods in the country it is not continuing work like before.
However, many American and British brands, such as Burger King and Marks & Spencer, are still continuing to operate in the country as they have been unable to stop independent franchise outlets to halt operations.
While the Renault plant in Moscow will resume production, AvtVAZ stated that it has partially stopped production at two of its Russian plants due to a shortage of electronic parts.
Car manufacturers worldwide have been struggling due to an acute shortage of semiconductor chips, used in making various car components such as windscreen wipers and car radios. This issue has been further exasperated for the nation, as the Western sanctions imposed on Russia have also banned semiconductors export.