Following Nissan, Hyundai also plans to close business in Russia: reports

Several automakers, including Nissan Motor and Renault, have already suspended operations in Russia amid the country’s war against Ukraine this year.

Korean car manufacturer Hyundai Motor may soon leave Russia amid the ongoing war against Russia, which has hit the country’s auto business hard this year. According to a report by the Reuters news agency, Hyundai is likely to completely stop its activities in Russia, as well as sell its production facilities to the state. Reuters cites South Korean media citing unnamed sources behind the information.

Hyundai Motor previously suspended its operations in Russia in March of this year, around the same time as Russia invaded Ukraine. The Korean automaker did not sell a single car from August to September and is facing a loss. It is easier for Hyundai to follow the example of several other automakers and completely stop business in Russia to avoid further losses.

According to the Korean media quoted by Reuters, Hyundai is analyzing its “future prospects in Russia due to difficult working conditions.” Hyundai Motor produces about 200,000 cars a year in Russia. The country contributes about four percent of the total production worldwide. Leaving Russia would result in big losses for Hyundai. According to analysts, Hyundai and Kia can lose about 315 million dollars (approx ₹2584 crore).

The main reasons for the departure of car manufacturers from Russian shores are the lack of high-tech equipment and sanctions against Russia, which led to a sharp reduction in production or suspension of work. Recently, a Japanese automaker Nissan Motor sold its factory in Russia for a price, before announcing an official exit from the company. Several other manufacturers like Renoleft Russia after Moscow sent armed forces to Ukraine on February 24 of this year.

Last week, Nissan Motor Company announced its decision to transfer its business in Russia to a state-owned company for just 1 euro. The Japanese automaker will suffer losses of about $687 million (roughly converted to ₹6,535 crore) in one of the most expensive exits of an automaker from Russia in recent times.

Date of first publication: 18 Oct 2022, 10:12 IST