New Delhi: Hyundai Motor Co, one of the world’s top 10 biggest automakers by sales, is reportedly planning to sell its manufacturing plants in Russia and exit the market. According to South Korean media reports, negotiations to sell the factories to a Kazakh company are in the final stages, pending final approval from the Russian government.
The South Korean automaker suspended operations at its Russian plant last year and has been reviewing various options for its Russian business. The move to sell its manufacturing plants in Russia is likely due to the challenging economic environment in the country. Many factories in Russia have suspended production and furloughed workers due to shortages of high-tech equipment resulting from sanctions and an exodus of Western manufacturers since Moscow’s invasion of Ukraine last year.
Hyundai Motor and its affiliate, Kia Corp, build about 200,000 vehicles per year in Russia, representing about 4% of their global production capacity. Before the war, Renault, Hyundai, and Kia were among the top three selling brands in Russia. However, as global players have pulled out, Chinese brands are replacing them in Russia’s war economy.
Hyundai Motor has not made an official announcement regarding the sale of its factories in Russia. The company stated that it was reviewing various scenarios for the future of its business in Russia and that no decision had been made so far.
Exiting the Russian market would allow Hyundai to focus on other growth opportunities in more stable markets. The company has been expanding its presence in India, where it plans to invest $2.5 billion over the next five years to develop electric vehicles and other mobility solutions.
In conclusion, Hyundai Motor’s reported plans to sell its manufacturing plants in Russia and exit the market reflect the challenging economic environment in the country. The move would allow the company to focus on growth opportunities in more stable markets, such as India. As global players pull out of Russia, Chinese brands are filling the void in the country’s war economy.
The sale of Hyundai’s factories in Russia, pending final approval from the Russian government, would mark the end of an era for the automaker in the country.