Renault could be most affected automaker due to Ukraine crisis: Report
Renault is one of the major global automakers that has been impacted by the ongoing conflict between Russia and Ukraine. However, the French auto giant might be the most impacted due to the crisis, owing to its high level of exposure to Russia, claims a report by Fitch Ratings. The report claims that Renault's turnaround effort from the Covid-19 shock could be derailed by the ongoing geopolitical crisis in Eastern Europe.
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The report says Renault has the highest exposure to Russia among all European automakers and suppliers. The French company generated an estimated 10 per cent of revenue and 12 per cent of operating margin from Russia last year. In the current situation, potential losses from operations in Russia could result in Renault burning cash for the next two years and delay its recovery from the Covid-19 pandemic, the report said.
The automaker has a 68 per cent stake in AvtoVaz, the manufacturer of Lada vehicles. It produces cars at another plant near Moscow. With such a large amount of assets in Russia, the company is at the centre of investors' concern, claims the report.
Renault recorded a record annual loss in 2020. Its chief executive officer Luca de Meo has put the company on a slow path to pre-pandemic earnings performance since taking over in mid-2020. He said that Renault's revival could be derailed by a slower-than-expected rebound in new-vehicle sales and protracted supply-chain issues.
The current Ukraine crisis has already impacted several automakers in Europe and the US as well. Auto brands such as Volvo, Mercedes-Benz, Daimler Truck, General Motors, Ford, Suzuki have stopped shipping their vehicles to the Russian market. Also, several automakers have announced the business suspension in the country. But the larger impact has started showing as the automakers are facing a crunch in parts procurement, as both Russia and Ukraine play key roles in the automotive supply chain for automakers around the world.