Russia is using the French carmaker Renault to teach Western companies a lesson about leaving its market

Now, the French carmaker may need to pay 112.5 billion rubles — about $1.3 billion — if it seeks to return after the war, its former Russian partner Avtovaz said. 

The stipulation is a sign that foreign firms looking to return to the market could face high compensation demands.

(AvtoVAZ (Russian: АвтоВАЗ, IPA: [ɐftɐˈvas]) is a Russian automobile manufacturing company owned by the state. It was formerly named as VAZ (Russian: ВАЗ), an acronym for Volga Automotive Plant in Russian))

In the case of Renault, Maxim Sokolov, the CEO of Avtovaz, said the company and the Russian state had invested 112.5 billion rubles in the business since its exit through 2025.

"It is clear that these investments will have to be reimbursed somehow upon return," Sokolov said, according to the TASS state news agency.

US President Donald Trump has signaled a willingness for the US to reconcile with Moscow, spurring recent discussions about a return of Western businesses — such as Renault — to the market.

In 2022, Renault sold its 67.6% stake in Avtovaz to the Russian state with the option to buy back its assets within six years. 

The automaker took a 2.2-billion-euro write-down from the exit from the market that was its second largest, after France.

A spokesperson for Renault told Business Insider the company didn't "foresee any change for the short term" regarding a return to business in Russia. The company didn't comment on Sokolov's statements.

David Szakonyi, an associate professor of political science and international affairs at George Washington University, told BI that Sokolov's comments about compensation should be taken seriously, even if Russian officials were also posturing. 

The exit of foreign businesses created winners at home in Russia, some of whom picked up assets at fire sale prices.

"Freely allowing foreign companies back in is going to diminish their  profit streams and make life a lot more competitive, so if that is going to happen, Russia wants some kind of compensation for liberalizing its market," said Szakonyi, who's a specialist in Russia's political economy.

Western companies aren't clamoring to go back to Russia
Even though Russia is a large market, analysts have said recently that businesses are likely to be cautious about returning to the country, even if sanctions are lifted.

Russia's wartime economy is facing problems including high inflation, currency volatility, and sky-high  interest rates. President Vladimir Putin's  ironclad reign presents concerns about the rule of law and safety.

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