Nissan takes $687M loss selling Russian business for 1 euro

Nissan is selling its Russian assets to the state, with an option to buy back the business within six years.

October 11, 2022 06:02 AM

Reuters

Nissan builds the X-Trail at its plant in St. Petersberg. Production was suspended in March due to supply chain disruptions.

MOSCOW -- Nissan will hand over its business in Russia to a state-owned entity for 1 euro ($0.97), it said Tuesday, taking a loss of around $687 million and exiting the country months after it was forced to halt production there.

The automaker will transfer its shares in Nissan Manufacturing Russia to state-owned NAMI, it said. The deal will give Nissan the right to buy back the business within six years, Russia's industry and trade ministry said.

The sale will include Nissan's car plant and research facilities in St Petersburg as well as its sales and marketing center in Moscow.

Nissan had suspended production at its St. Petersberg plant in March due to supply chain disruptions. Since then, the company and its local unit had been monitoring the situation, it said. But there was "no visibility" of a change to the external environment, Nissan said, prompting it to decide to exit.

Junior alliance partner Mitsubishi Motors is also considering exiting Russia, the Nikkei newspaper said. A spokesperson for Mitsubishi said nothing had been decided.

The deal marks the latest major company exit since Russia sent tens of thousands of troops into Ukraine in February and mirrors a move by its alliance partner Renault, which sold its majority stake in Russian automaker AvtoVAZ to a Russian investor in May. Renault reportedly sold its stake in AvtoVAZ for one ruble ($0.0157).

"'Nissan Manufacturing Russia' is transferring its assets to the state - a deal of great significance for the industry," Russia's Industry and Trade Minister Denis Manturov said in a statement.

Nissan sold 53,000 vehicles in Russia last year.

The exit comes as Nissan has embarked on a major shift in its relationship with Renault. The partners said on Monday they were in talks about the future of their alliance, including Nissan considering investing in a new electric vehicle venture by Renault.

Those talks, which could prompt the biggest reset in the alliance since the 2018 arrest of long-time executive Carlos Ghosn, have also included the possibility of Renault selling some of its controlling stake in Nissan, two people with knowledge of the talks have told Reuters.