Nissan, a Japanese automobile manufacturer, will leave Russia and sell its operations for one euro.
A global Japanese automaker with its headquarters in Nishi-ku, Yokohama, Nissan Motor Co., Ltd. trades as Nissan Motor Corporation and is frequently abbreviated as Nissan. The business sells its cars under the Nissan, Infiniti, and Datsun names, along with its own line of Nismo-branded vehicles that have undergone performance tuning. With the Nissan zaibatsu, today known as Nissan Group, the corporation dates back to the early years of the 20th century. Nissan Motor Co. Ltd. announced on Tuesday that it will sell its operations in Russia to a state-owned company for 1 euro ($0.97), incurring a loss of about $687 million in the latest pricey outflow of a major corporation from the nation.
According to the statement, the Japanese carmaker transferred its ownership of Nissan Manufacturing Russia LLC to state-owned NAMI. According to the Russian Ministry of Industry and Trade, the agreement will allow Nissan the option to acquire back the company after six years. The agreement will be finalized “in the coming weeks,” Nissan said in a separate statement, and the business will incur a “one-off impact” of about 100 billion yen ($686.5 million). It also mentioned that its roughly 2,000 Russian employees will be given “employment protection” for a full year. Neither party disclosed any financial information about the deal on Tuesday. Nissan stated that it retains its full-year projection and that additional analysis will be conducted before disclosing specifics as part of the routine reporting of the second quarter results in November 2022. Meanwhile, Nissan’s pullout from Russia will have a negative impact on the Renault Group’s net income, which is expected to be 331 million euros for the second half of 2022, according to French automaker Renault, which owns a sizable interest in Nissan (before IFRS adjustments). The operational margin, free cash flow, and financial outlook of the Renault Group will not be impacted by this transaction, Renault added. Nissan will now be the most recent significant corporation to quit Russia since Moscow put tens of thousands of troops into Ukraine in February as a result of the arrangement. It also echoes a move made by Renault, the largest stakeholder in Nissan, which sold a Russian investor its majority ownership in the Russian automaker Avtovaz in May. Nissan’s production and development facility in St. Petersburg and its sales and marketing centre in Moscow will both be sold to NAMI, the ministry said. Nissan reaffirmed its earnings projection for the fiscal year that ends in March but said it anticipated an exceptional loss of about 100 billion yen ($687 million). The decision by Nissan’s Japanese partner is expected to cost Renault, which owns 43% of Nissan, 331 million euros in net income in the second half of 2022. Due to supply chain issues, Nissan had to halt operations at its St. Petersburg facility in March. The business and its local affiliate have been keeping an eye on the situation ever since, it claimed. Nissan claimed that there was “no visibility” of an alteration to the exterior environment, which led it to choose to leave. Nissan is keeping its earnings prediction for the current fiscal year ending in March 2023, despite leaving a significant market and losing a sizable sum of money in the process. According to the Nikkei newspaper, junior alliance partner Mitsubishi Motors Corp. is also thinking about leaving Russia. According to a Mitsubishi representative, nothing has been decided. The departure occurs as Nissan and Renault are beginning a significant change in their partnership. The two companies announced on Monday that they were in discussions about the future of their partnership, with Nissan expressing interest in funding a new Renault electric vehicle initiative.
According to the partnerships with knowledge of the talks, Renault may sell some of its controlling interest in Nissan as part of those negotiations, which may result in the alliance’s greatest reset since longtime boss Carlos Ghosn was arrested in 2018. Renault allegedly paid one rouble ($0.02) for the sale of its Avtovaz stock. Russian Industry and Trade Minister Denis Manturov stated in a statement that the Nissan agreement was “of tremendous significance for the industry.”