Hyundai Motor will shut down its local plant, which once drove the automaker’s strong sales in Russia, by the end of this year. Some local reports say that the Korean carmaker will sell the plant to a local company in Russia in the aftermath of the Russian-Ukrainian war.
Hyundai Motor plans to close down its Russian plant in St. Petersburg, Russia, by the end of December, according to Russia’s TASS news agency on Dec. 5 (local time). This will mean a total of 22 months of shutdown since March 2022.
Hyundai Motor built a 200,000-unit-per-year automobile plant in St. Petersburg in 2010 under the leadership of then-Chairman Chung Mong-koo. Until last spring, the plant produced popular models such as the Solaris, the Creta, and the Rio. In August 2021, it was the number one local automaker with a 27.5 percent market share in Russia.
However, after Russia’s invasion of Ukraine, the plant was forced to close due to a shortage of parts due to Western sanctions. Situations are similar for other foreign automakers including Renault, Mazda, Nissan, Benz and Volkswagen.
The prolonged shutdown has sparked local speculations about the sale of the Hyundai Motor plant. In September, Denis Valentinovich Manturov, minister of Trade and Industry of the Russian Federation, said that Hyundai will be acquired by a Russian company and that the deal will be finalized soon. Russian auto and parts sellers AGR Automotive and Avtotor have been mentioned as possible candidates. China’s Chery Motor is also reportedly interested in taking over the plant.
Some experts have speculated that Hyundai Motor may have come to the negotiating table with a buy-back clause that will allow the Korean carmaker to sell the plant and buy it back once the war ends.
In the meantime, Hyundai’s and Kia’s combined share of the Russian car market, estimated at 780,000 units per year, has plummeted to 1.4 percent.
Chinese companies have taken the place of Hyundai and Kia. It is no exaggeration to say that they dominate the imported car market in Russia with an 80 percent market share. “Chinese companies’ share of the Russian car market has grown more than sevenfold from only 7 percent before Russia’s invasion of Ukraine in June 2021,” said Autostat, a Russian automotive market research firm. China has not joined the sanctions against Russia.