Renault Group CEO Luca de Meo delivers a speech as French Finance and Economy Minister visits the Alpine sports cars' Renault factory in Dieppe on January 28, 2022.
(Photo : SAMEER AL-DOUMY/AFP via Getty Images)
The world's biggest automakers have a huge problem in their hands after Russia launched a full-scale invasion of Ukraine. Operations of Volkswagen, Stellantis and Renault in Russia are now certainly at risk with Western leaders set to impose the harshest sanctions yet on the country after Thursday's deadly attack.
All three carmakers have assembly plants or factories in Russia. The one that will be affected the most by this conflict is Renault Group, which has a controlling stake in AvtoVAZ. That company makes Lada, the most popular car brand in Russia.
Renault also has a second facility near the Russian capital of Moscow. Renault's chief executive Luca de Meo said in an interview that most of the parts that the Lada plant uses is sourced locally, which should help isolate the facility from production problems heading its way. That being said, AvtoVAZ is already looking for alternative supplies of computer chips in case the coming sanctions by Western countries started affecting deliveries to Russia.
VW Group and Stellantis own factories in Kaluga
Also affected by the escalating conflict are VW Group and Stellantis. Both automakers have factories in the city of Kaluga, which is located just 180 kilometers (112 miles) southwest of Moscow. Kaluga has become an automotive hub in Russia with Volkswagen Group building the Skoda Rapid, Tiguan, and Polo, as well as assembling the Audi Q7 and Q8 SUVs there.
Stellantis and Mitsubishi jointly operate a factory in Kaluga from which it intends to export vans to the European continent. Other big name suppliers also do business in Kaluga such as Magna, Visteon, and Continental.
Renault, Stellantis, and Volkswagen might be the auto companies that have the most to lose from the impending sanctions, but they are not the only carmakers that are active in the Russian region. Mercedes made a huge investment recently in Russia, pouring in more than $284 million (€250 million) in a plant to build the company's popular E-Class and SUV models.
A Mercedes spokeswoman issued a statement to Automotive News Europe about the growing tensions between Russia and Ukraine, saying "We are very concerned about the recent developments and hope that further escalation can be prevented." She added that Mercedes, as a matter of course, will take into account applicable sanctions in their business activities with Russia.
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BMW also watching Russia conflict closely
BMW does not own a full factory in Russia but it has business interests in that country as well. The German automaker has had semi-knockdown kits assembled at a facility operated by Russian manufacturing company Avtotor in Kaliningrad since the year 1999.
In fact, BMW just renewed its contract with Avtotor until 2028, with the tie-up between the two companies calling for painting, welding, and assembling vehicles at the Kaliningrad factory. The models that would be built in the facility are BMW's 5 series as well as its X5, X6, and X7 large SUVs.
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