AutoBeta(AutoBeta.net)10/18 Report--

After Toyota and Nissan recently announced their withdrawal from the Russian market, South Korean carmaker Hyundai Motor is also considering a decision on its Russian business, including the sale of local car manufacturing plants. According to a person familiar with the matter in South Korea's East Asia Daily, Hyundai management submitted a report analyzing the current situation and future prospects of the Russian market, which includes an analysis of the situation and impact of the sale of Russian factories. It is also pointed out that the current Russian environment is very difficult to carry out normal financial activities, so Hyundai management will make a final decision on whether to maintain its plant in Russia. Selling the factory is one of the options under consideration. However, so far, Hyundai officials have not commented on the above reports.

Since the escalation of the situation in Russia and Ukraine at the end of February, Hyundai Motor's plant in St. Petersburg, Russia has suspended production since March due to a shortage of spare parts and financial difficulties. Relevant data show that from January to February this year, Hyundai sold more than 7000 vehicles in the Russian market respectively. After entering March, Hyundai suspended operations in Russian factories due to disruptions in spare parts supply, and sales in Russia fell sharply to 3708 vehicles that month. Since then, Hyundai has mainly sold vehicles through inventory. In July, Hyundai sold only 14 cars in Russia, compared with zero from August to September. In other words, Hyundai has not sold a single car in Russia for two consecutive months.

According to the concern of the automobile industry, Hyundai began production at the St. Petersburg plant in Russia in 2011, with an annual output of more than 200000 vehicles, accounting for about 4% of the global production capacity, mainly producing Hyundai small cars SOLARIS, miniature SUV Crete, Kia Rio models and so on. In 2016, the chairman of Hyundai Motor Group also went to the Russian factory in person and said that "even if there are difficulties, we should not give up the Russian market", which shows the importance of its factory to Hyundai.

According to the data, the Russian car market sold 1667135 vehicles in 2021, of which Hyundai sold 167331, accounting for 10 per cent of the total Russian car market and about 6 per cent of Hyundai Motor Group's global sales. Market industry analysts said that Hyundai has a large-scale investment and a certain market share in the Russian market, and it is not an easy decision for Hyundai to withdraw from the Russian market.

Under the situation in Russia and Ukraine, a number of car companies around the world have announced their withdrawal or suspension of operations in Russia. Among them, on May 16 this year, the French carmaker Renault Group officially withdrew from its Russian business. Russia is Renault's second-largest car market after France, with figures showing that Russia sold 1666780 cars in 2021 and Renault sold 131552, accounting for 8 per cent of total Russian car sales. However, in the general environment, Renault's production and operation in the Russian market has been hit hard, with the latest figures showing that Renault's cumulative sales in Russia from January to August 2022 were only 31638 vehicles, a year-on-year drop of 65.2 per cent. Luca de Mayo, chief executive of Renault, said: "the decision to leave Russia was painful, but the company was forced to make a decision because Renault was no longer able to build cars in Russia."

On September 23, Japanese car company Toyota announced that it would end production operations at its St. Petersburg plant in northwestern Russia, becoming the first Japanese automaker to announce its withdrawal from the Russian market. Toyota said it would stop production and sales except for maintenance services for cars already sold in Russia. On the same day, Toyota Executive Chairman Tian Zun told the media: "Russian local legal persons will be liquidated without transfer or sale." It should be noted that Toyota, like Hyundai, suspended production at its plant in St. Petersburg, Russia, in March, while Toyota halted imports of Russian cars due to supply chain disruptions.

On Oct. 12, another Japanese automaker, Nissan, also announced its withdrawal from the Russian market, becoming the second Japanese automaker after Toyota to announce its withdrawal from the Russian market, a move that will cost Nissan 100 billion yen. Nissan said its production and R & D facilities in St. Petersburg and its marketing centre in Moscow would be "transferred" to the National Institute of Automotive Engineering (NAMI) under Russia's Ministry of Industry and Trade for 1 euro.

In the camp of Japanese car companies, in addition to Toyota and Nissan, Mazda also said it was considering withdrawing from the Russian market and ending its production business in Russia. At present, Mazda's manufacturing plant in Russia has stopped production, but Mazda has not yet made a final decision on sales and after-sales issues. On Sept. 26, media reported that Mazda was in the middle of an acquisition agreement with Russian carmaker Sollers, the Soles Automobile Group. A Mazda spokesman said the company was discussing stopping car production at its joint venture plant in Vladivostok, eastern Russia, without giving details. In addition, the Russian joint venture plant between Mitsubishi and European carmaker Stellantis has also been suspended.

As a result of the conflict between Russia and Ukraine, the local market of Russian cars has also been hit hard. According to auto industry statistics, Russian cars fell 62.9%, 78.5%, 83.5%, 82%, 74.9%, 62.4% and 59.6% respectively from March to September compared with the same period last year. The latest figures show that Russia sold 46698 vehicles in September 2022, with cumulative sales falling 59.8 per cent in the first three quarters from a year earlier to 506661. Avtostat, a Russian auto market analyst, predicts that by the end of this year, the Russian auto market will decline to where it was 15 years ago.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat