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| Hyundai Motor Manufacturing Russia in Saint Petersburg / Courtesy of Hyundai Motor |
Automaker's overseas sales in recovery
By Nam Hyun-woo
Hyundai Motor said Wednesday that it had been given the green light from the Russian authorities to acquire a General Motors plant in Saint Petersburg, part of its plan to expand production capacity in the country.
The Federal Antimonopoly Service (FAS) of Russia approved Hyundai Motor Manufacturing Russia's bid to take a 94.83 percent stake in the plant ― formerly operated by GM ― the auto giant added.
According to reports from multiple Russian media outlets, the FAS said the two companies occupy less than 15 percent of the Russian market, so the transaction would not lead to a significant increase in Hyundai Motor's share.
GM built the plant in 2008 at a cost of approximately $300 million, but halted operations there in 2015. BMW and a number of other automakers were reported to be interested in the plant.
Though the authority has approved the transaction, there are a number of steps Hyundai has to go through to fully acquire the plant, including gaining additional approval from Russian government departments, and negotiating a price with GM, industry officials said.
Since 2011, Hyundai Motor has been running a manufacturing facility in Saint Petersburg that has the capacity to assemble up to 230,000 vehicles annually. Models including the Solaris, the Creta and its affiliate Kia Motors' Rio are produced there.
Hyundai Motor highlighted the importance of the Russian market during its second quarter conference call.
"The Russian automobile market is showing signs of a solid recovery following government's policies to boost the economy and support the automobile industry. This is leading to a recovery in Hyundai Motor sales there," the company said. "For instance, we have raised the price of the Creta crossover twice to protect profitability following oil price declines, but the model is still popular."
In recent months, Hyundai Motor's sales in Russia have recovering from the fallout of COVID-19. According to the Association of European Businesses, Hyundai sold 13,373 vehicles in June this year, down 18 percent from the same month last year, but a significant improvement from sales in May, which stood at 6,477.
Alongside Russia, the carmaker's sales in other overseas markets are improving to pre-COVID-19 levels. In July, the company sold 235,716 vehicles outside Korea, up from 226,127 in June.
The company's share price is also benefiting from the recovery. After hovering at just over 110,000 won throughout last year, it closed at 65,900 won March 19 when fears over the impact of COVID-19 were peaking worldwide, but it had climbed back to 132,500 won as of Monday.
