Renault announced the suspension of its activities in Russia

The automaker Renault, which has its second largest market in Russia, announced on Wednesday that it is suspending its activities due to the invasion of Ukraine.

A day after France's Total Energies, which had been heavily criticized for continuing to do business in Russia, it was Renault's turn, which “as of today” suspended its activities at its factory in Moscow, where three Renault models (Captur, Duster and Arkana) are assembled as well as the Terrano of its Nissan partners.

As for its almost 68% stake in the two AvtoVAZ units - where the bulk of Renault's workforce is located - the French company said “to evaluate the possible options”, taking into account - it added - that it will act “responsibly towards its 45,000 employees in Russia”.

Due to this suspension, the automobile group acknowledged that it “is forced to review its financial perspective for 2022″, lowering the operating margin from 4% to 3%.

The Ukrainian Foreign Minister on Wednesday called for a worldwide boycott of Renault over its previous refusal to leave the Russian market following the Kremlin invasion of Ukraine. “Renault refuses to withdraw from Russia,” said Dmytro Kuleba, on Twitter ahead of Renault's announcement. “I call on customers and companies around the world to boycott the Renault Group.”

Partly state-owned Renault had suspended production at its plants near Moscow last month following the invasion of Russia, but subsequently resumed production, according to reports.

The war in Ukraine has put Renault in a delicate situation given the importance of Russia, as it is its second market only behind France.

Last year, it sold 18% of its vehicles in Russia and that country accounted for 10% of its turnover.

With the suspension of Renault's activities, which joins the slowdown in Total Energies activity, another large French group remains at the center of criticism, Leroy Merlin, who rules out, for the time being, no longer operating in Russia.

Speaking to the French Assembly, Ukrainian President Volodymir Zelensky today made an explicit criticism of Gallic companies that continue to operate in Russia, despite the circumstances. “They must leave the Russian market: Renault, Auchan (Alcampo in Spain), Leroy Merlin and others must stop being the sponsors of the Russian war machine,” he demanded.

The European Union (EU) promoted a ban on exports of luxury vehicles valued at more than 50,000 euros (US$54,760) to Russia as part of its latest sanctions package.

The ban will apply to models of several European car brands, including Audi, BMW, Mercedes, Ferrari and Porsche. The EU measure also includes boats and planes, as well as chairlifts and motorcycles valued at more than 5,000 euros.

Many European automakers have already voluntarily suspended sales to Russia.

The move is part of a fourth broader round of sanctions that the European Union is imposing due to Russia's invasion of Ukraine.

The luxury car initiative has more symbolic weight than economic importance. Russia accounts for around 2% of global sales of Europe's leading luxury car brands, and strong global demand could offset lower exports to Russia, according to Bloomberg Intelligence.

Mercedes, BMW and Porsche and Audi's parent company, Volkswagen AG, already announced suspensions on exports to Russia earlier this month.

“Given the heavy backlog of orders for all premium brands, I would expect any lost exports to Russia to be redirected to other markets,” said Michael Dean, an analyst at Bloomberg Intelligence.

With information from EFE and Bloomberg

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