TOKYO: Japan’s Nissan Motor Co Ltd has suspended production in Russia for the first half of the business year that began on April 1 as there is little prospect of the situation improving, Chief Executive Makoto Uchida said on Tuesday.

“We believe this situation could become more serious and prolonged,” a spokesman quoted Uchida as saying at Nissan’s annual general meeting (AGM), in reference to a worsening Russia-Ukraine conflict.

Workers have been informed and the automaker will continue to monitor the situation and minimise its impact, Uchida said.

Nissan suspended production in Russia in March as well as exports there after Russia invaded Ukraine, raising logistics risk as Western nations imposed an array of economic sanctions. Russia calls its actions in Ukraine a “special operation”.

The revelation comes as companies worldwide are under pressure to cut business ties with Russia.

However, only 2.4% of Japanese companies operating there have done so since the invasion began on Feb. 24, the lowest among Group of Seven nations, showed an analysis by Teikoku Databank based on a survey from the Yale School of Management.

Nissan’s alliance partner Renault SA withdrew from Russia in May after mounting criticism of its presence there.

At the AGM, Uchida also said Nissan has been in talks with Renault about the alliance’s electric vehicle (EV) future after the French automaker hinted at spinning off its EV unit.

Renault is overhauling its business in response to the electrification of the auto industry and rapid growth of EV makers such as Tesla Inc. In April, it said it would consider all options including listing its EV business.

Nissan, an EV pioneer with its 2010 Leaf, last month said it was too early to consider spinning off its own EV division.

“We will carefully explore matters from every angle, and decide on our own,” Uchida said.

Also at the AGM, Nissan rejected – as widely expected – an investor proposal to deem 43% stakeholder Renault as Nissan’s parent for disclosure purposes, thereby forcing the publication of a decades-old agreement stipulating their capital and business alliance.

The investor argued disclosure would allow shareholders to scrutinise and help balance the alliance.
Nissan, which owns a 15% non-voting stake in Renault, last month said it would disclose the agreement’s content in its annual securities report to the extent it does not violate a confidentiality obligation.

Nissan also said it would not be directly involved with the restructuring of former key supplier Marelli Holdings Co Ltd, though it would continue collaboration.

The auto parts maker, owned by U.S. private equity firm KKR & Co Inc, filed for court-led rehabilitation last week after a voluntary debt workout failed to gain full support.

Reuters