Auto giant Hyundai Motor of South Korea is considering options for its suspended Russia operations, which could include selling its manufacturing plant there, according to South Korean media on Tuesday.
Since Moscow sent armed forces into Ukraine on February 24, many Russian factories have suspended production and furloughed workers due to a lack of high-tech equipment caused by sanctions and an exodus of Western manufacturers.
Due to the difficult operating environment, Hyundai Motor recently submitted to management a report analyzing its future prospects in Russia, according to the Dong-a Ilbo newspaper, citing an unidentified auto industry source.
There were no immediate comments available from Hyundai Motor.
Hyundai Motor, which, along with its affiliate Kia Corp, is one of the world’s top ten automakers by sales, produces about 200,000 vehicles per year in Russia, accounting for about 4% of its total production capacity.
“We estimate that Hyundai and Kia together could generate at least a 450 billion won ($315 million) loss this year due to the business environment in Russia,” said Esther Yim, an analyst at Samsung Securities.
Hyundai Motor suspended operations at its Russian plant in March, and according to a regulatory filing, the company sold no cars in the country in August and September.
“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,” said Kim Jin-woo, an analyst at Korea Investment & Securities.
Nissan Motor Co Ltd announced last week that it would sell its business in Russia to a state-owned entity for one euro, incurring a $687 million loss in the latest costly exit by a global company from the country.
(Adapted from FinancialExpress.com)