Expanding Presence in Russian Market
Hyundai Motor Co. has expanded its global territory by acquiring a GM plant in St. Petersburg, Russia. This marked the first time that Hyundai Motor Group has acquired a production facility from a global automaker.
Hyundai Motor's Russian subsidiary said on Dec. 22 (local time) that it completed a contract to acquire GM's St. Petersburg plant in early November. However, due to COVID-19, Hyundai Motor has not decided when it will begin production at the plant.
The St. Petersburg plant has an annual production capacity of 100,000 units. It has produced Chevrolet and Opel models for sales in Russia since its completion in 2008. However, GM shut down its operations in July 2015 as part of a downsizing plan. Since then it has been an acquisition target of global automobile brands.
Hyundai Motor is ranked third in the Russian market with sales of 146,890 units in 2020. Lada, a Russian company, sold 302,744 units, grabbing the first place. Kia Motors came in second with 181,706 units.
Combined sales of Hyundai and Kia rose 7 percent in December despite a global auto market slump. By acquiring the highly recognized GM plant in Russia, Hyundai Motor has laid the groundwork for becoming the No. 1 player in the Russian market.
The newly acquired plant is expected to generate synergies with Hyundai Motor's existing plant in St. Petersburg, which has been producing strategic models for the local market such as the Solaris and the SUV Creta since its completion in 2010. Its annual production capacity is 200,000 units. The plant has served as a bridgehead not only to Russia but to the Eastern European market.
The two plants are about 30 kilometers apart, a 40 to 50 minutes ride. In particular, 11 companies including Hyundai Mobis and Hyundai Hysco, have formed a cluster in St. Petersburg, which accounts for 25 percent of Russia’s automobile production.