The Russian automotive exodus continues.
Hyundai is reportedly contemplating offloading its factory in Saint Petersburg, Russia, a sign that it's looking into completely cutting ties with the Russian market for the time being. The plant, which produces vehicles like the Kia Rio and Hyundai Solaris, was initially shuttered back in March due to Western sanctions due to Russia's invasion of Ukraine.
This type of thing is starting to turn into a mass exodus. Just last week, Nissan announced that it was pulling out of Russia, selling its facilities to the Russian government for just 1 Euro, taking a $687 million hit in the process. Renault and Toyota have left the market or shuttered facilities, taking a significant profit loss to do so. Mazda is also reportedly mulling over pulling out and VW is attempting to find a buyer for its plant too. It's bad news on the western front, and Hyundai looks to be the next domino to fall.
According to The Korea Herald, Hyundai Motor Manufacturing Russia shipped zero cars in August and September, a stark contrast to the 17,649 cars it shipped in January of this year. Just last year, the group sold a combined 377,612 cars which gave it the third-largest market share at 23%, right behind Renault.
Nothing has been decided yet. The issue seems to be that the company has invested heavily in the market in recent years making a pull-out difficult. In 2019, the company announced a massive investment of 640 billion won (approximately $450 million) in the market by 2027. Then in 2020, the automaker purchased an old GM Plant for $35 million in Sestroretsk and conducted a massive renovation of their Saint Petersburg plant as well.
Reuters reports that the company could lose an estimated 450 billion won (approx. $315 million) due to the country's loss of sales and production this year. Kim Jin-woo, a Korea Investment & Securities analyst, is quoted as saying: "While it's still unclear what Hyundai would do with its Russia factory, Hyundai has a lot to factor in to actually exit from Russia, such as financial situations and its relationship with Russia and the United States."
The company is weighing its options at this time, seeing if it can weather the losses with the potential of reopening manufacturing or just closing up and moving out. Our guess is that the company will want to focus its energies on its long-term goals in places with more stability. The company announced earlier this year its plan to launch 17 new EVs by 2030, and it's just opened a new plant in Indonesia with plans to break ground on its US EV plant in the coming days.