AutoBeta(AutoBeta.net)02/05 Report--

According to foreign media reports, South Korean car company Hyundai Motor in Russia's St. Petersburg plant is carrying out large-scale layoffs, accounting for about 88% of the total number of workers at the plant.

Reported that Hyundai Motor in western Russia's St. Petersburg plant from January 16 to February 27 local time to lay off workers at the factory. Hyundai currently employs 2500 people at its St. Petersburg plant and plans to cut nearly 2200 jobs, accounting for about 88 per cent of the plant's total workforce.

Affected by the conflict between Russia and Ukraine, in October 2022, the media reported that Hyundai was considering a decision on its Russian business, including the sale of local car manufacturing plants. A report in South Korea's East Asia Daily pointed out that Hyundai management has 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. and 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. But Hyundai did not respond to the news at the time. At the end of December 2022, foreign media reported that Hyundai Motor had laid off staff in Russia because the plant had been shut down. "as the plant continues to shut down, Hyundai is taking steps to optimize its staff in Russia," Hyundai Russia said in a statement at the time. "

The massive layoffs at the plant are also related to the hindrance to Hyundai's development in Russia. According to previous reports from the auto industry, Hyundai's plant in St. Petersburg, Russia, has suspended production since March 2022 due to factors such as parts shortages and financial difficulties, and 90% of its employees can only take time off after the shutdown.

According to previous reports from the automotive industry, Hyundai began to lay out its St. Petersburg plant in Russia in 2010, which was completed in 2010 and then began production in 2011, with an annual output of more than 200000 vehicles, accounting for about 4% of the global production capacity. 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. In 2020, Hyundai acquired a former GM plant near St. Petersburg and increased its investment. In 2022, Hyundai plans to mass-produce cars at the plant and export them to European and North American markets, with an annual sales target of 455000 vehicles. However, under the influence of major environmental factors such as the conflict between Russia and Ukraine, Hyundai's sales in Russia have been greatly impacted. Failed to achieve the production plan.

Data show that Hyundai's new car sales in Russia in 2022 were 119708, a year-on-year drop of 66.5%. Of course, affected by the general environment, car sales in Russia in 2022 were also poor, with a cumulative sales of only 687370, down 41.24% from 1.667 million in 2021. Before the conflict between Russia and Ukraine broke out, the Russian market was one of the most important markets for Hyundai. As a reference, the Russian car market sold 1667135 vehicles in 2021, of which Hyundai sold 167331, accounting for 10 per cent of the Russian car market and about 6 per cent of Hyundai's global sales.

In fact, it is not surprising that Hyundai's new car sales in Russia fell sharply in 2022. Data show that Hyundai's Russian market sales reached more than 7000 from January to February in 2022. After entering March, Hyundai suspended operations in Russian factories, and sales in Russia fell sharply to 3708 in that month, and then to 2242 in April. Since then, Hyundai has mainly sold vehicles through inventory. Hyundai sold only 14 cars in Russia in July and zero from August to September, not selling a single car for two consecutive months.

After the conflict between Russia and Ukraine, in addition to Hyundai, car companies including Renault, Toyota, Nissan and Mazda all announced their withdrawal from Russia, while the gap in the market is being filled by local and Chinese brands. Russian car sales in 2022 were 687370, down 41.24 per cent from a year earlier, with Chinese cars' share of the Russian market rising from 9 per cent in January to 37 per cent in December 2022.

The European Enterprise Association (AEB) said the decline in Russian car sales was affected by Western sanctions and unprecedented pressure on the Russian market. However, the Russian car market is expected to pick up in 2023 with the increase in production by car companies such as AvtoVAZ and the opening of Moscovici and Harvard plants, the Ministry of Industry and Trade said. AEB predicts that Russian car sales will be about 770000 in 2023, up 12% from a year earlier.

As for Hyundai, market analysis, Hyundai has a large-scale investment and a certain market share in the Russian market, so it is not an easy decision for Hyundai to withdraw from the Russian market. but Hyundai is also aware that it is difficult to carry out normal operations in the current Russian environment. So far, it is not clear whether Hyundai Motor will resume production after the announcement of layoffs at its St. Petersburg plant in Russia, but Hyundai Motor Group said it would strive to resume operations at the plant. It is currently negotiating with the local government to resume operation of the plant. Hyundai's Russian subsidiary executives said at a recent public event: "Hyundai's St. Petersburg plant currently produces only maintenance and repair parts for sold vehicles, but in order to resume production, we are looking for a solution with the Russian Ministry of Industry and Trade and the St. Petersburg municipal government."

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