PARIS, March 24 — Renault’s Russian partner Avtovaz will go it alone to build Lada brand cars without foreign car parts, it said today as Russian authorities consider the future of the carmaker’s Moscow plant after it exits the country.
That’s equivalent to a third of its current market value. Investors have wiped 40 per cent off its market cap over the past month. Meanwhile, Avtovaz, which is controlled by Renault and produces the Lada and Renault car brands, said on Thursday that it would manufacture new models without relying on imported components and would work to rebuild its supply chains. It imports about 20 per cent of its parts and raw materials.
A significant part of Renault’s turnaround strategy relied on merging its low-cost brand Dacia and Lada into a single business unit. Lada’s vehicles were to be built using Dacia’s vehicle platform.A source close to Renault said its low-cost Dacia brand will remain profitable even without the economies of scale of the Lada brand.
Credit Suisse analysts said that a Russian exit for Renault would be a better option than a “wait and see” approach, even if it comes at a cost for the company.