France’s Renault might consider delaying adding Russian automaker AvtoVAZ to its accounting books, in a drive to shield the former from the ongoing political and economic turmoil in Russia that led to the steep fall of the auto market.
AvtoVAZ, the Soviet-era automaker that produces Lada-branded vehicles, had been taken under Renault’s control, together with the Japanese alliance partner Nissan Motor Co. Russia’s largest carmaker should have been consolidated with the alliance this year – but the situation in the country is seen as worsening this year. In 2013 sales on the Russian auto market slid 5 percent, last year they fell 10 percent and accounting firm PwC has forecasted a dive of 25 to 35 percent for 2015. Chief Financial Officer Dominique Thorman announced during the official presentation of Renault’s 2014 financial results that most likely the consolidation with AvtoVAZ will not be possible this year.
“The Russian market has fallen quickly in the past but it has also come back quickly. You have to be ready for that,” remained optimist Carlos Ghosn, the chief executive officer of both Renault and Nissan. He added that his belief the Russian market will rebound has nothing to do with the strategy for AvtoVAZ, with Renault remaining committed to the major investment. Still, analysts believe that Renault “seems to be in denial about the consequences of the geopolitical and economic turmoil,” according to Max Warburton, an analyst with Sanford C. Bernstein and the forecast for a fast recovery come as “wildly optimistic”.
Via Automotive News Europe