Wednesday, November 30, 2022

Nissan Sells Its Russian Business for Less Than $1, Takes a $687M Loss

Nissan Motor announced on Tuesday that it would sell its operations in Russia to a state-owned company for 1 euro ($0.97), incurring a loss of about $687 million in the latest pricey outflow of a major corporation from the nation.

According to the Japanese automaker, it will transfer its stake in Nissan Manufacturing Russia to the state-owned NAMI. Russia’s industry and trade ministry said the agreement gives Nissan the right to buy back the company within six years.

Nissan is the most recent major corporation to leave Russia since Moscow sent tens of thousands of troops into Ukraine in February. It also mirrors a move by Nissan’s largest shareholder, Renault, which sold its majority stake in Russian automaker Avtovaz to a Russian investor in May.

Nissan’s sales and marketing center in Moscow, as well as its production and research facilities in St. Petersburg, will be sold to NAMI, according to the ministry.

Nissan maintained its earnings projection for the fiscal year that ends in March but said it anticipated an exceptional loss of about 100 billion yen ($687 million). The decision by Nissan’s Japanese partner, Renault, which owns 43% of Nissan, will cost the French company’s net income 331 million euros in the second half of 2022.

Due to supply chain disruptions, Nissan halted production at its St. Petersburg plant in March. The business and its local unit have been observing the crisis since then. However, Nissan stated that there was “no visibility” of a change in the external environment, prompting it to decide to exit.

According to the Nikkei newspaper, Mitsubishi Motors, a junior alliance partner, is also contemplating exiting Russia. Mitsubishi’s spokesperson stated that nothing had been decided.

The departure comes as Nissan begins a significant shift in its relationship with Renault. The two announced on Monday that they were discussing the future of their alliance, with Nissan considering investing in Renault’s new electric vehicle venture.

Those discussions, which could result in the alliance’s biggest reset since the arrest of long-time executive Carlos Ghosn in 2018, have also included the possibility of Renault letting go of some of its controlling stake in Nissan, according to two sources with knowledge of the talks.

Renault is said to have sold its Avtovaz stake for one ruble ($0.02).

“‘Nissan Manufacturing Rus’ is transferring its assets to the state – a deal of great significance for the industry,” said Denis Manturov, Russia’s Minister for Industry and Trade, in a statement on Tuesday.

Last year, Nissan sold 53,000 vehicles in Russia.