(CTN News) – Hyundai Motor is set to cease operations at its St. Petersburg plant in Russia by the end of this year, marking a significant development for the automaker.
Reports suggest that the Korean company intends to sell the plant to a local Russian firm following the Russian-Ukrainian war. The closure of the plant, which was established in 2010 and had been a key driver of Hyundai’s strong sales in Russia, will result in a shutdown period of 22 months since March 2022.
Notably, the facility had been responsible for producing popular models like the Solaris, Creta, and Rio, and had held the top position among local automakers in Russia with a 27.5 percent market share as of August 2021.
However, due to Russia’s invasion of Ukraine and subsequent Western sanctions causing a shortage of parts, the plant was compelled to shut down.
This situation is not unique to Hyundai, as other foreign automakers such as Renault, Mazda, Nissan, Benz, and Volkswagen have also faced similar challenges.
The extended closure of the plant has led to local speculations regarding the potential sale of Hyundai Motor. In September, Denis Valentinovich Manturov, the Minister of Trade and Industry of the Russian Federation,
Announced that a Russian company would acquire Hyundai,
The deal expected to be finalized soon. Possible candidates for the acquisition include Russian auto and parts sellers AGR Automotive and Avtotor. Additionally, there are reports of China’s Chery Motor expressing interest in taking over the plant.
Some experts have suggested that Hyundai Motor may have entered into negotiations with a buy-back clause, allowing the Korean carmaker to sell the plant and repurchase it once the conflict comes to an end.
Meanwhile, the presence of Hyundai and Kia in the Russian car market has significantly declined, accounting for only 1.4 percent of the market share.
In contrast, Chinese companies have emerged as the dominant players in the imported car segment, capturing a staggering 80 percent market share.
Autostat, a renowned Russian automotive market research firm, highlighted that Chinese companies’ market share has experienced a remarkable growth of over seven times since Russia invaded Ukraine in June 2021.
It is worth noting that China has refrained from participating in the sanctions imposed on Russia.