Hyundai Wia to Build Engine Plant in Russia with Annual Capacity of 240,000 Units

Groundbreaking Ceremony Held on the 30th of Last Month in Saint Petersburg, Russia
Europe's First Auto Parts Factory... Producing 240,000 Engines Annually from 2021

Oh Seung-hoon, head of Hyundai Wia's Russian branch, and Alexander Beglov, governor of Saint Petersburg, Russia, are taking a commemorative photo at the groundbreaking ceremony of the engine plant held at Hyundai Wia's Russian branch in Saint Petersburg, Russia, on the 30th of last month. (Photo by Hyundai Wia)

[Asia Economy Reporter Kim Ji-hee] Hyundai Wia is establishing its first automotive parts factory in Russia. With the establishment of the Russian corporation, the company plans to actively pursue parts orders not only in Russia but also in the European finished car market.

Hyundai Wia's Russian corporation announced on the 1st that it held a "groundbreaking ceremony for a new engine factory" in Saint Petersburg, Russia, on the 30th of last month. The ceremony was attended by Alexander Beglov, Governor of Saint Petersburg, Kwon Dong-seok, Consul General of Saint Petersburg, and Oh Seung-hoon, Managing Director of Hyundai Wia's Russian corporation. In his greeting, Managing Director Oh said, "We are pleased to establish an engine factory in Saint Petersburg, one of Russia's most important cities," adding, "We will produce top-level engines and showcase Hyundai Wia's advanced technology in the Russian and European markets."

The engine factory of Hyundai Wia's Russian corporation, the company's first automotive parts production base in Europe, will be built on a site of 132,000㎡ (approximately 40,000 pyeong). Starting from October 2021, it plans to produce 240,000 passenger car engines annually. Initially, it will produce 1600cc gasoline engines and plans to diversify engine types according to the situation in Europe in the future. Production volume will also be expanded up to 300,000 units annually depending on market conditions.

This investment was made possible through Russia's corporate investment promotion system (SPIC). Currently, Russia offers benefits such as reduced import tariffs on parts and regulatory easing if foreign companies producing automotive parts meet local production ratios.

Accordingly, Hyundai Wia, which has been exporting engines produced at its existing engine factory in Shandong Province, China, to Russia and Europe, has decided to transfer part of its production line from China to Russia. Through this, it expects to reduce tariffs and logistics costs, thereby enhancing competitiveness in parts orders.

The continued growth of the Russian automotive market is cited as a reason for Hyundai Wia's establishment of the engine factory. According to KOTRA, new car sales in Russia, which were around 1.3 million units in 2016, increased to 1.59 million units in 2017 and 1.8 million units in 2018. In the first quarter of this year, Hyundai Kia Motors sold 93,446 units, ranking first in market share in Russia. The fact that internal combustion engine vehicles remain popular, with fewer than 5,000 electric vehicles registered in Russia as of July last year, also played a role.

With the establishment of the Russian corporation, Hyundai Wia now has a total of five engine production bases worldwide. Currently, engines are mass-produced domestically in Seosan, Chungcheongnam-do, and Pyeongtaek, Gyeonggi-do, and overseas at the Shandong corporation in China and the Mexico corporation. These five production bases can produce over 2 million engines annually.

This content was produced with the assistance of AI translation services.