Nissan Receives $687 Million Loss After Selling Its Russian Business For 1 Euro
TOKYO – Nissan Motor Co Ltd said on Tuesday that it is planning to sell its business branch in Russia to a state-owned organization for an extremely ridiculous cost of one euro ($0.97), incurring a loss of approximately $687 million in the recent costly exit by a global company from the country.
The Japanese automobile manufacturer said it would transfer its stake in Nissan Manufacturing Russia LLC to the state-owned NAMI. According to Russia's trade and industry ministry, the agreement gives Nissan the right to buy back the company within six years.
Nissan is the most recent major corporation to abandon Russia seeing as Moscow sent tens of thousands of soldiers into Ukraine in February. It also resembles a move by Nissan's largest shareholder, Renault, which sold its majority stake in Russian automaker Avtovaz to a Russian investor in May.
Nissan's production and research facilities in St Petersburg, including its sales and marketing center in Moscow, will be sold to NAMI, according to the ministry.
Nissan predicted an extraordinary loss of approximately 100 billion yen ($687 million), but maintained its profit forecasts for the fiscal year ending in March.
Renault, which possesses 43% of Nissan, estimated that the Japanese partner's decision would cost it 331 million euros in net income in the second half of 2022.
Due to supply chain disruptions, Nissan halted production at its St. Petersburg plant in March. The company and its local department have been observing the situation since then, it said. However, Nissan stated that there was 'no visibility' of a shift in the external environment, urging it to decide to exit.
According to the Nikkei newspaper, junior alliance partner Mitsubishi Motors Corp is also thinking of leaving Russia. Mitsubishi's spokesperson stated that nothing had yet been decided.
The departure comes as Nissan begins a significant shift in its connection with Renault. On Monday, the two announced that they were discussing the destiny of their alliance, with Nissan looking to invest in Renault's new electric vehicle project.
Those discussions, which could result in the alliance's greatest reset since the detainment of long-time executive Carlos Ghosn in 2018, also include the chance of Renault selling some of its controlling stake in Nissan, according to two individuals who have knowledge of the talks.