• Oct 26, 2009
It seemed like a good idea at the time, but with hindsight being 20-20, how many failed ventures can be summed up by that same excuse? Just last year, Russia was looking to foreign investors as one of the most promising emerging markets in the world. Renault got locked into a bidding war with Fiat and General Motors for a large stake in Autovaz, Russia's largest automaker, known to consumers for producing Lada.

Renault won and paid $1 billion for the 25% stake. But one year and one giant global economic meltdown later, that victory is looking more like a liability – the quarter interest is now worth less than a quarter of what Carlos Ghosn and company paid for it. And now Renault is expected to bail Autovaz out of its troubles or else face the wrath of one Vladimir Putin.

The autocratic Russian prime minister, whose government both owns another quarter of Autovaz on the one hand and has extended significant loans to it on the other, has reportedly demanded that Renault cough up some serious dough – $850 million, to be exact – in "emergency loans" to keep the Russian automaker solvent following a nosedive in the domestic market that saw sales plummet a whopping 50 percent and its workforce subsequently cut by a fifth.

Putin is reportedly threatening to further dilute Renault's stake in Autovaz if they don't comply, but while Ghosn has pledged to establish a new joint venture between the two together with sister company Nissan, the cash has yet to flow. With the prospect of folding to Putin's demands threatening to weaken Renault's image in the Russian market and around the world, it seems to be a lose-lose situation.

[Source: Financial Post | Image: Dmitry Astakhov/AFP/Getty]


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    • 1 Second Ago
  • 33 Comments
      • 5 Years Ago
      Actually, Nissan bought the stake in AvtoVAZ, but haven't provided any new technologies.
      Now, Mr Putin threatened Nissan, and it immediately made an agreement to introduce 5 new models by 2014.

      That's why the Russians love their powerful leader.

      • 5 Years Ago
      It's not Russians; it's Putin. He learned his trade from KGB.
      • 5 Years Ago
      In Soviet Russia, the car drive YOU!!
      • 5 Years Ago
      Russia is not a growing marketplace of any kind. In fact, demographically, they're shrinking -- think low birth rates and huge waves of emigration.

      The only attractive thing about doing business in Russia is access to its: cheap labor and natural resources (oil). Beyond that, if you're expecting to sell a lot of "stuff" in Russia, there are many far more promising markets.

      Putin does need to be careful here: he's starting to establish a pattern of bullying that most large multi-national conglomerates aren't likely to take well to. No foreign investment = fail.
      • 5 Years Ago
      You mean the Czar Putin? Well expect the same thing from Obama sooner or later.
        • 5 Years Ago
        So lame...There's no way you can even begin to compare the two countries and the ideologies of both leaders...
        • 5 Years Ago
        You don't even deserve that half star you got left.
      • 5 Years Ago
      Ghosn: "and then the doctor told me to cough twice"
      • 5 Years Ago
      Mr. Bean is that you?
        • 5 Years Ago
        Never trust Russians, never do business with Russians.

        These are some of the world's worst crooks, nearly every one of them, corrupt to the bone, shady to the bone.

        Renault should get the hell out of Russia.
        • 5 Years Ago
        funny your name is Vor. Means "thief" in Russian, yes?
      • 5 Years Ago
      Is Putin really as stupid as he appears to be? He forces Shell to cedes its stake in Sakhalin II to Gazprom and then wonders why there's a drop in foreign investment in Russian energy projects. He cuts off gas to Ukraine (and, by extension, Europe) and complains that Europe is reducing its reliance on Russian gas.

      What a tit.
        • 5 Years Ago
        I really hate it when people say "this". However, THIS.
      • 5 Years Ago
      As a Nissan owner im gunna pretend that my opinion matters lol but i hope Ghosn tells Putin where to stick it and ditch that soon-to-be 3rd world marketplace and keep Nissan and Renault going as they are

      also ghosn should be talkin to Magna so they have someone to make their cars for Opel and vauxhaul....unless they do a deal with GM where it can re badge their platforms....in which case that recommendation is irrelevant
      • 5 Years Ago
      After trying to strongarm Mr. Nissan out of nissan.com, this is what karma looks like, Mr. Ghosn.
        • 5 Years Ago
        HAHAHAHA!!! Good one, dollar for anyone else that knows what he's talking about...
      • 5 Years Ago
      Ghosn: Cooomme oooooooonnn!
      Putin: No.
      Ghosn: Pleeeeeaaasse?
      Putin: No.
      Ghosn: I'll be your friend.
      Putin: No.
      Ghosn: Awww, you're no fun.
      • 5 Years Ago
      Yet another company gets screwed by Putin...
      Yeh Russia is a huge market with lots of growth opportunities but its got to be in the back of your mind that the guy in charge will screw you over in the end
        • 5 Years Ago
        "Putin is reportedly threatening to further dilute Renault's stake in Autovaz if they don't comply.."

        In Russia...Putin dilutes you.
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