Nissan originally idled car production in Russia back in March following Russia's invasion of Ukraine. Operations were supposed to resume in September, but an announcement was made last month about extending suspension until the end of 2022. That will no longer be the case as the automaker has now decided to exit the Russian market altogether.
It effectively means all local operations under the Nissan Manufacturing Russia LLC (NMGR) will be sold to NAMI, the Central Research and Development Automobile and Engine Institute. It not only includes the manufacturing and R&D facilities in St. Petersburg but also the Sales & Marketing center in Moscow. These will go by a different name under the new ownership.
The sale will be formalized in the coming weeks and affected employees will receive compensation equating to 12 months of pay. The Japanese automaker says it'll take a one-off impact of around 100 billion yen, which works out to approximately $686,455,000 at current exchange rates. It's important to mention the contract stipulates Nissan has the option of buying back everything within the next six years, so it could possibly return to Russia and retake ownership of the entity and operations until 2029.
The decision follows a similar move taken by alliance partner Renault, which sold its 67.7-percent stake in Avtovaz – maker of the Lada models – to NAMI back in May. The French company with the diamond logo also has the possibility to buy back the stake in the next six years.
Getting back to Nissan, it started making cars at the St. Petersburg plant in 2009. Employees working there were responsible for assembling the X-Trail, Qashqai, and Murano SUVs. A manufacturing record was established in 2018 when 56,525 vehicles were produced, with over 350,000 units completed as of early 2019.
Signaling the automaker's imminent exit, Nissan President and CEO Makoto Uchida declared: "On behalf of Nissan, I thank our Russian colleagues for their contribution to the business over many years. While we cannot continue operating in the market, we have found the best possible solution to support our people."