Through its control of Avtovaz, a Russian auto company, Renault, which trades on the over-the-counter market in the U.S., owns one of the larger investments of any foreign automaker in the country. And so it's more exposed to the collapse of the Russian ruble, which was caused by sinking oil prices. Renault-Nissan is also the biggest manufacturer of battery-powered cars, whose attractiveness rises when gasoline prices are high and diminishes when gasoline is more affordable.
Carlos Ghosn, CEO of both automakers and the alliance, is taking steps to limit the damage. In Japan on Friday, he told reporters at Nissan headquarters in Yokohama that "we have suspended taking orders" for certain cars in Russia. Renault owns 43.4% of Nissan (NSANY) ; Nissan owns 15% of Renault.
Ghosn has been at pains to maintain his optimism for his company's long-term vision for Russia, ever since Western nations imposed economic sanctions on the country because of Russian aggression in Crimea and Ukraine.
The latest freeze is limited to specific models, while orders already placed are being honored, he said, according to Reuters. "We didn't do it (suspend orders) overall, just on some models we said, 'Sorry, until we see where this situation is going we don't take orders.' "
Russia is Renault's third-largest market after France and Brazil. The country is Nissan's third-largest market in Europe and the sixth-largest market globally.
The alliance sells its own cars as well as those made by Avtovaz, which makes Lada. While Renault has an advantage over some importers and foreign manufacturers because it makes many parts locally, the ruble's uncertain future suggests that the alliance must limit the sale of imported vehicles and those that rely on imported parts.
In recent weeks, the alliance has raised prices on Renault and Nissan cars sold in Russia by up to 15%. In September, the Russian government enacted as a scrappage program that provides a 40,000 ruble subsidy for anyone trading a car six years or older for a new car -- similar to the U.S.'s $3 billion "cash for clunkers" program in 2009.
Since introducing the Nissan Leaf four years ago, the automaker has sold 150,000 of the electric vehicles, more than any other manufacturer. But electric vehicles remain a sliver of all passenger-car sales.
Low gas prices weaken the economic and political cases for buying battery-powered vehicles. On the economic side, the payback period during which lower electricity costs compensate for the higher cost of batteries grows longers. On the political side, the argument that depriving hostile foreign powers of oil profits falls apart.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.