Hyundai Motor Completes Acquisition of Russia GM Plant... Establishes Annual Production System of 300,000 Units

Hyundai Kia Motors Rank 2nd and 3rd in Russian Market Share
Aiming for 1st Place with Annual Production Capacity of 300,000 Units
Russian Government Actively Supports Local Production Attraction Policy

[Asia Economy Reporter Suyeon Woo] Hyundai Motor Company has completed the acquisition of the GM plant located in Saint Petersburg, Russia. With this acquisition, Hyundai has established a production system capable of manufacturing 300,000 units annually in Russia, laying the foundation to achieve the number one market share.

Hyundai Motor's local subsidiary in Russia announced on the 22nd (local time) that it has completed the acquisition process of the GM Russia plant. This plant, established by GM in Saint Petersburg in 2008, had an annual production capacity of 100,000 units but has been inactive since 2015 due to GM's global production reduction policy.

Since 2011, Hyundai has been operating a plant in Saint Petersburg with an annual capacity of 200,000 units, and with this acquisition, it will build a production system of 300,000 units per year in Russia. However, the restart date of the acquired plant has not yet been determined due to the impact of the COVID-19 pandemic.

Last year, the Russian plant was the only overseas plant of Hyundai to achieve an over-utilization rate (123%). This can be interpreted as a shortage of production supply facilities compared to local demand. Although the utilization rate dropped due to the COVID-19 pandemic until the first half of this year, it has shown a recovery trend since the third quarter, recording an over-utilization rate (103%) compared to the original plan.

The Hyundai Russia plant produces the compact sedan Solaris (Accent), the mid-size sport utility vehicle (SUV) Creta, supplying both the Russian domestic market and overseas export markets, and also manufactures Kia's compact sedan Rio (Pride).

Through this acquisition, Hyundai has reaffirmed its commitment to targeting the highly potential Russian market. Hyundai Kia Motors has already achieved the number one market share among imported cars, and now aims to catch up with local manufacturers to become the number one brand in the entire Russian domestic market. As of November this year, based on market share, Kia (13.5%) ranks second, Hyundai (11%) ranks third, closely chasing the local manufacturer AvtoVAZ (38.6%) which holds the first place. In particular, the Kia Rio (Pride), produced under consignment at Hyundai’s Russian plant, ranked third among best-selling cars in the Russian domestic market, and Hyundai’s mid-size SUV Creta ranked fourth.

The Russian automobile market once grew to about 2.5 million units annually but shrank to around 1.8 million units last year due to regional economic recession. However, with only 2.5 cars per 1,000 people and a population nearing 150 million, it is still considered a major emerging market with significant potential. Furthermore, considering exports to the Commonwealth of Independent States (CIS) market in Central Asia, the market size could expand even further.

The Russian government is actively promoting local production by foreign automakers by reducing tariffs on parts for automobile production and assembly and easing legal regulations if they maintain a local production ratio of 60-70%. An industry insider said, "As the Russian government encourages local production in various ways, Hyundai Kia Motors’ local production and sales volume are expected to steadily increase."

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