As anticipation grows for peace negotiations regarding the Ukraine war, attention is also focused on whether major corporations with a business presence in Russia, particularly in the automobile sector, will re-enter the market. Hyundai Motor Group is considered to be the most likely among global automobile corporations to return first.
According to industry sources on the 14th, Hyundai Motor must exercise or waive its buyback rights for the St. Petersburg plant, which it sold in December 2023, within this year. Hyundai Motor transferred the plant to a local corporation for 10,000 rubles (about 140,000 won), including a buyback clause that allows the company to revive the plant within two years, and the deadline for this right is coming in December.
As Western economic sanctions against Russia intensify, South Korean, Japanese, European Union (EU) automobile corporations, excluding China, have withdrawn their local operations. Notable among them are Hyundai Motor, Toyota, Volkswagen, Stellantis, and Renault. Among these, only Hyundai Motor and Stellantis offered buyback options and sold assets such as factories.
Before the outbreak of the Ukraine war, Hyundai Motor Group led Russian exports in the domestic industry. According to the Korea International Trade Association, in 2021, automobiles ($2.5 billion, 25.5%) and automotive parts ($1.5 billion, 15.1%) accounted for more than 40% of South Korea's total exports to Russia.
The market share was also high in the local market. Hyundai Motor and Kia sold 357,000 vehicles in Russia in 2021, capturing 21% market share, ranking first. Considering that German, French, and U.S. brands combined accounted for about 35% and Japanese brands about 10%, their position as a single brand was overwhelming.
There is a strong expectation that Hyundai Motor will be the first to return if peace is achieved in Russia. While Toyota and Volkswagen have also been mentioned, they lack buyback options for the factories they have already sold and are viewed as brands from Japan and Europe that support Ukraine, making it difficult to resume operations in the short term.
If Hyundai Motor resumes its operations in Russia, automobile parts manufacturers such as HYUNDAI WIA will also be able to restart their factories. HYUNDAI WIA established an engine plant with an annual capacity of 240,000 units in Russia in October 2019 and set up a local corporation. The Russian plant is also HYUNDAI WIA's first European engine production base.
While global brands, including Hyundai Motor, withdrew from the Russian market, Chinese companies have taken over. Last year, new car sales in Russia recovered to pre-war levels, with more than half of these sales attributed to Chinese manufacturers such as Chery. These companies have been producing vehicles using the factories formerly utilized by global automakers.
According to the China Passenger Car Association (CPCA), over 1 million Chinese cars were exported to Russia last year, increasing sevenfold compared to 2022. The market share of Chinese automobiles in Russia surged to over half at 63% last year, prompting the Russian government to begin responding to excessive market encroachment through measures such as tariff increases.