Nissan sells Russian business for 1 euro, loses $687 million

Nissan’s logo is illuminated on a prototype of its new all-electric Ariya crossover. Nissan’s Z Proto performance car is reflected in the vehicle’s grille, while the redesigned Nissan Pathfinder SUV sits in the background.

Michael Whelan/CNBC

Nissan Motor Co., Ltd. The company said on Tuesday it would hand over its operations in Russia to a state-owned entity for 1 euro ($0.97), lose about $687 million and exit the country after being forced to stop production for several months.

The Japanese company will transfer its stake in Nissan Manufacturing Russia LLC to state-owned NAMI, it said. Russia’s Ministry of Industry and Trade said the deal would give Nissan the right to buy back the business within six years.

The deal makes Nissan the latest major company to pull out of Russia since Moscow sent tens of thousands of troops to Ukraine in February.It also reflects a move by the French automaker, Nissan’s largest shareholder Renaultwhich sold its majority stake in Russian automaker Avtovaz to Russian investors in May.

The projects sold to NAMI will include Nissan’s production and research facilities in St. Petersburg and a sales and marketing center in Moscow, the ministry said.

Nissan said it expected an unusual loss of about 100 billion yen ($687 million), but maintained its profit forecast for the fiscal year ending in March.

Nissan has suspended its St. Petersburg production. The Petersberg plant opened in March due to supply chain disruptions. Since then, the company and its local unit have been monitoring the situation, it said. But Nissan said there was “no visibility” to changes in the external environment, prompting its decision to pull out.

Junior Alliance Partner Mitsubishi Motors Corporation The Nikkei said the company was also considering an exit from Russia. A Mitsubishi spokesman said no decision had been made.

The exit comes as Nissan’s relationship with Renault begins to take a major turn. The two said on Monday they were discussing the future of the alliance, including Nissan considering an investment in a new Renault electric car business.

The talks could lead to the biggest restructuring of the alliance since the arrest of longtime executive Carlos Ghosn in 2018, two people familiar with the matter told Reuters, which also includes the possibility of Renault selling some of its controlling stake in Nissan. .

Renault reportedly sold its stake in Avtovaz for one ruble ($0.02).

Russian Industry and Trade Minister Denis Manturov said in a statement that the Nissan deal was “of great significance for the industry.”

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