South Korean car manufacturer Hyundai Motors is leaving the Russian market and has sold its factory in St. Petersburg to AGR Automotive Group. This move makes Hyundai the latest car manufacturer to pull out of Russia since the outbreak of the Russia-Ukraine conflict.
Russian media and industry insiders revealed on September 13th that AGR (formerly known as the Volkswagen Group's Russian subsidiary) will acquire Hyundai Motor Manufacturing Russia (HMMR). Sources stated that the specific terms of the transaction and the purchase price will be announced by the end of this month.
Hyundai declined to confirm the news. The company had previously stated that it was considering various options for its Russian operations, citing a tough battle with local Russian car manufacturers.
Insiders revealed that AGR outbid other automakers, such as Russian car manufacturer Avtotor and China's Chery Automobile, to purchase Hyundai's factory.
The Hyundai Motor Group, which includes Kia Motors, has invested in Russia for many years. However, the company recently found itself in a dilemma in Russia, debating whether to continue its endeavors there or cut its losses and exit the market.
Hyundai's St. Petersburg factory, built in 2010, has an annual production capacity of 230,000 vehicles, mainly producing SUV models like the Tucson and Palisade.
However, following the outbreak of the Russia-Ukraine conflict, HMMR halted operations at the St. Petersburg plant in March 2022 due to sanctions imposed on Russia by Western countries, which resulted in Russia's inability to import automotive parts.
Industry observers say that Hyundai had initially intended to stay in the Russian market. But due to the protracted conflict between Russia and Ukraine and a sharp decline in Hyundai's sales in Russia, the company changed its mind.
According to the Association of European Businesses (AEB), Hyundai only sold 6 cars in Russia in August of this year, a 99.9% drop compared to 2,892 units in the same period last year. In the first eight months of this year, HMMR's cumulative sales stood at 1,605 units, a market share of 0.4%, down 96.5% from 46,063 units over the same period last year.
