Renault sells Soviet-era icon Lada as it exits Russia, for now

London(CNN Business) Renault is selling its business in Russia, including a controlling stake in Lada, becoming the latest carmaker to exit the country over its assault on Ukraine.

In a statement on Monday, the French company said it had agreed to sell Renault Russia to the city of Moscow and its stake of nearly 68% in Lada parent Avtovaz to a state-owned industry research center.

Renault is keeping open the option of returning to Russia — the deal gives the company various windows to buy back its interest in Avtovaz over the next six years, the company added.

"Today, we have taken a difficult but necessary decision; and we are making a responsible choice towards our 45,000 employees in Russia, while preserving the Group's performance and our ability to return to the country in the future, in a different context," Renault CEO Luca de Meo said in the statement.

Renault announced on March 23 that it was suspending activities at its Moscow factory and would take a charge of nearly 2.2 billion euros ($2.3 billion) to write down the value of its Russian business to zero.

Avtovaz's Lada brand represented nearly 21% of the Russian market in 2021.

Western carmakers, along with other multinational companies, ran for the exit following Russian President Vladimir Putin's decision to invade Ukraine in February. Toyota (TM) and Volkswagen (VLKAF) were among a raft of companies to announce in early March that they had stopped production and halted exports to the country.

Shortly before Renault's announcement later that month, the company was one of a few French businesses called out by Ukrainian President Volodymyr Zelensky for continuing their operations in Russia. Ukrainian Foreign Minister Dmytro Kuleba went further, calling for a global boycott of the carmaker.

Auto sales in Russia have plummeted since the invasion, slammed by Western sanctions and the exodus of foreign companies. Just 55,000 new cars and light commercial vehicles were sold in March, down 63% from the same month last year.

Lada — an icon of Soviet-era self-reliance — could, in theory, stand to benefit from the absence of foreign competition. But it is heavily dependent on imported parts.

The company brought forward a company-wide summer vacation to April, and announced it would move to a four-day workweek for three months starting in June to try to save more than 40,000 jobs. It also said it would design new Lada models to be less reliant on imports.

The company did not elaborate on which models would be affected, but said they would gradually become available in the coming months.

Evgeny Eskov, editor-in-chief of Russian car industry journal Auto Business Review, told CNN Business last month that the redesigned models will be simpler versions of current cars, without extra features such as ABS.

"Just brutal cars from the past," he wrote in an email to CNN Business.

-— Clare Sebastian, Anna Cooban and Xiaofei Xu contributed to this article.