Loss Of $687 million! Japanese Automobile Firm Nissan Sells Off Russian Business For Just 1 Euro

Nissan Motor Co., Ltd. has said that it will hand over its business in Russia to a state-owned entity for just 1 euro. The exit from the country will result in a mammoth $687 million loss for the company.

The firm will transfer its shares in Nissan Manufacturing Russia LLC to state-owned NAMI, it said yesterday, and the deal will give Nissan the right to buy back the business within six years, Russia's industry and trade ministry said, as per a Reuters report. For the uninitiated, NAMI is a research and development automobile and engine institute in Russia.

Nissan

The deal makes Nissan the latest global company to leave Russia since Moscow sent troops into Ukraine

for invasion in February. The sale to the state-owned entity NAMI will include Nissan's production and research facilities in St Petersburg as well as its sales and marketing centre in Moscow, the ministry said.

As far as employees are concerned, Nissan mentioned that under the new ownership, all of Nissan¡¯s employees in the market will receive employment protection of 12 months. The sale is expected to be formalised in the coming weeks following approval from the relevant authorities.

Nissan will take a one-off impact of approximately 100 billion yen from this exit.

However, Nissan said in its press release that it expected an extraordinary loss of around 100 billion yen ($687 million), but maintained its earnings forecast for the financial year ending in March 2023.

It was way back in March 2022 when Nissan suspended production at its St. Petersburg plant due to supply chain disruptions. Since then, the company and its local unit have 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 Russia, the report mentioned.

Also Read: Russians Grab Last Goods From H&M & IKEA

Nissan-Renault Partnership

Reuters

This exit amid the war comes as Nissan has embarked on a major shift in its relationship with French automobile firm Renault, with the two firms saying as recently as on Monday that they were in talks about the future of their alliance, including Nissan considering investing in a new electric vehicle venture by Renault.

Also, Renault, which owns 43% of Nissan, estimated the exit decision by its Japanese partner would lead to a 331 million euro hit to its net income for the second half of 2022.

Meanwhile, the future alliance 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, as per the report..

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