Nissan sells its business in Russia for one euro, will lose about 687 million dollars

Nissan will soon transfer its operations in Russia to a state-owned entity for just one euro, it was recently announced, incurring a loss of about 687 million dollars and leaving the country a few months after the company was forced to halt production there, Reuters reported.

The Japanese company will transfer its shares in Nissan Manufacturing Russia LLC to the state-owned NAMI. The agreement will give Nissan the right to buy back the business within six years, the Russian Ministry of Industry and Trade announced.

The mentioned agreement makes Nissan the latest major company to leave Russia since Moscow sent tens of thousands of soldiers to Ukraine in February. It also reflects the move of Nissan’s largest shareholder, the French car manufacturer Renault, which sold its majority stake in the Russian car manufacturer Avtovaz to a Russian investor in May.

The sale to NAMI includes Nissan’s manufacturing and research facilities in St. Petersburg, as well as its sales and marketing center in Moscow, the ministry stated.

Mitsubishi may also be leaving Russia

The company stated that it expects a significant loss of about 687 million dollars, but maintains its earnings forecast for the financial year ending in March. Nissan suspended production at its St. Petersburg plant in March due to supply chain disruptions. Since then, the company and its local unit have been monitoring the situation, it is noted. However, there has been no ‘visible’ change in the external environment, they said, which is why they are exiting the country.

The younger partner in the alliance Mitsubishi Motors Corp is also considering leaving Russia, Nikkei reports, but their spokesperson said that nothing has been decided.

The exit from Russia comes at a time when Nissan has embarked on a major change in its relationship with Renault. The two companies recently stated that they are discussing the future of their alliance, including Nissan’s consideration of investing in a new Renault venture with electric vehicles.

Such discussions could prompt the largest reset of the alliance since the arrest of longtime CEO Carlos Ghosn in 2018, and also included the possibility of Renault selling part of its controlling stake in Nissan, two people familiar with the negotiations told Reuters.

Renault reportedly sold its stake in Avtovaz for one ruble. The agreement with Nissan was ‘of great significance for the industry,’ said Russian Minister of Industry and Trade Denis Manturov in a statement.