Nissan sells its Russian division for $0.97, suffers $687Mn loss

Nissan Motor Co. recently announced that it will sell its operations in Russia to a state-owned entity for $0.97 (INR 80), resulting in a loss of almost $687 million (INR 5,550 crore). This is reportedly the most expensive withdrawal by a multinational corporation from the country so far.

According to reliable sources, the Japanese carmaker transferred its ownership of Nissan Manufacturing Russia to state-owned NAMI. The Russian Ministry of Industry and Trade stated that Nissan would have the option to repurchase the business within six years of the agreement.

The said agreement has made Nissan the latest major organization to exit Russia since Moscow sent tens of thousands of its soldiers to Ukraine. Similar action was taken by Renault, Nissan’s largest shareholder, wherein the company sold its majority stake in the Russian automaker Avtovaz to a Russian investor.

According to the ministry, Nissan will sell its marketing and sales center in Moscow as well as its production and research facilities in St. Petersburg.

Nissan has apparently maintained its earnings projection for the current financial year, although the carmaker said that it anticipated a massive loss of approximately $687 million (100 billion yen).

According to Renault, which owns 43% of Nissan, the latest move by its Japanese partner will cause an impact of around $321 million (EUR 331 million) to its net profits for the second half of 2022.

Reportedly, due to supply chain disturbances, Nissan had to halt operations at its St. Petersburg facility. The firm and its local unit had been monitoring the situation ever since, it claimed. However, Nissan admitted that since there was ‘no visibility’ of a change in the external environment, it decided to leave Russia.

The departure occurs at a time when Nissan and Renault’s partnership is undergoing a significant change. The two stated this week that they were in discussions regarding the future of their relationship. The talks will likely include Nissan’s interest in contributing to Renault’s plans to launch a new electric vehicle company.

Source credit: https://www.financialexpress.com/express-mobility/nissan-takes-687-mln-loss-as-sells-russian-business-for-1-euro/2707762/