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Nissan is preparing to take a loss of more than $1.2 billion to get its business out of St Petersburg.
Nissan has confirmed it will sell its Russian business to the state-owned entity NAMI for a single euro (NZ$1.74), albeit with an option to buy it back within six years.
NAMI, or the Central Scientific Research Automobile and Automotive Engines Institute, is an organization founded more than 100 years ago that is responsible for the design and production of a number of the country’s cars and trucks, including the limousines used by President Vladimir Putin.
The deal makes the carmaker the latest major company to get out of Russia since the Ukraine invasion in February, mirroring a move by Renault earlier in the year.
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Renault was quick to pack up, selling its stake in AvtoVAZ in April for one symbolic rouble.
In April, the French manufacturer revealed its intent to “sell” its stake in AvtoVAZ, maker of the Lada brand, also to NAMI for a single symbolic rouble, or about three cents.
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Like the Nissan deal, Renault has the option to buy its business back.
Nissan’s sale will include production and research facilities in St Petersburg as well as its sales and marketing center in Moscow, Russia’s industry and trade ministry said.
According to Reuters, Nissan will take a loss of around NZ$1.23 billion to get out of Russia, but it maintains its earnings forecast for the fiscal year ending in March. Renault told the publication that it estimates the decision would result in a 331 million euro (NZ$575 million) hit to Nissan’s net income for the second half of 2022.
There have also been talks between Renault and Nissan regarding its relationship, with Nissan reportedly interested in investing in a new electric vehicle venture by Renault. Meanwhile, Renault may be considering selling some of its controlling stake in Nissan, possibly as a trade for the investment.
Currently, Renault owns about 43% of Nissan, while Nissan owns 15% of Renault. The Japanese brand has seen the structure as unbalanced, considering how vehicle development work between the two makers has been divided recently.
Nothing has been officially confirmed yet, however. The two released a joint statement saying they were “engaged in trustful discussions around several initiatives” and what “structural improvements” in their alliance.