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Renault Will Close Some Russian Operations Temporarily Due To Supply Chain Issues

Renault Will Close Some Russian Operations Temporarily Due To Supply Chain Issues
The French auto giant Renault's local divisions in Russia has said that some activities at its automobile assembly factories in the country would be suspended next week owing to logistics constraints that have resulted in component shortages.
The action follows Russia's invasion of Ukraine on Thursday. However Renault, which has three vehicle assembly factories in Russia, did not specifically say anything about whether the crisis had impacted its supply chain.
According to Citibank, Renault, which earned a profit in 2021 after two years of losses, is among the Western firms most exposed to Russia, where it earns 8% of its core profits.
The French carmaker's Russian unit said in a statement that production in Moscow would be halted from February 28 to March 5 due to "some interruptions in component supplies."
"Interruptions are primarily caused by tighter border controls in transit countries and the forced need to change a number of established logistics routes," the Russian unit of the company said, without naming any countries.
Separately, in a statement issued by Russia's leading automaker, Avtovaz, the company said that one of its vehicle factory in Togliatti in central Russia, could potentially shut down several assembly lines starting Monday. Avtovaz is also owned by Renault. 
The company cited a global scarcity of electronic components as the reason. The factory is expected to be fully operating on Tuesday, according to the company.
On Thursday, the US imposed broad export restrictions on Russia, restricting its access to global markets for everything from commercial electronics and computers to semiconductors and aviation parts. find out more
The restrictions do not apply to Renault or Avtovaz, but they do target certain component sources. In the event that US sanctions halt supply, Avtovaz CEO Nicolas Maure indicated this week that his company will seek alternate sources of electrical components.
In their declarations, neither Renault's unit nor Avtovaz acknowledged the invasion of Ukraine.
Despite the sanctions, the Association of European Business predicts that new car sales in Russia would fall to 3.3 per cent this year from 4.3 per cent in 2021, due to a scarcity of electronic components, logistical issues, and increased prices.

Christopher J. Mitchell

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