Hyundai Is Taking a Major Loss, Sells Its Plant in Russia for $111

But the Korean carmaker is taking a big blow, selling it for a nominal of 7,000 rubles, which is the equivalent of only $77.22 at the current exchange rates. A Hyundai spokesperson said that Hyundai will receive a total of 10,000 rubles ($111).

Hyundai is the latest carmaker that decided to sell its assets in Russia. Operations at its production center in Saint Petersburg were suspended in March 2022, less than a month after the war in Ukraine broke out, following sanctions imposed on the state.

Russian firm Art-Finance, supported by car dealer group Avilon, is the buyer. The transaction is carried out based on a clause that Hyundai can buy back the factory within two years of the sale.

The deal has already been greenlighted by Russia’s governemnt commission on foreign asset sales, which demands discounts of at least 50 percent on deals that companies departing from the state are involved in.

The deal will be completed by December 28. Hyundai admitted in a regulatory filing that it is taking a 287 billion won ($220.75 billion) loss on selling the plant.

Together with Kia, Hyundai was among the top three selling brands in Russia before the war. But in the context of a collapsing car market, sales have turned slow, with Hyundai only selling six new cars in August 2023. In the same period of last year, the Asian carmaker had sold 2,892 units.

Back in 2019, Hyundai and Kia were scoring impressive numbers, selling as many as 400,000 vehicles in Russia in 2019. As of 2021, the two brands had a 22.5% market share in Russia.

The production center has the capacity to build over 200,000 cars per year. That is where Hyundai used to manufacture the Solaris, Creta, Rio, and Rio X-Line.

Hyundai follows in the footsteps of other Western carmakers which decided to halt operations on the territory of the Russian Federation. One year ago, Nissan sold its local production center to Russia’s Central Research and Development Automobile and Engine Institute for just one euro ($1.10).

This translates into a loss of 100 billion yen ($697.43 million). According to a clause in the sale contract, Nissan can buy back the facility within the next six years.

In May 2023, Volkswagen sold its production facility to Art-Finance. While global players are pulling out of the Russian car industry, the Chinese brands are replacing them. Meanwhile, the Russian carmakers are collapsing.

For instance, Lada rolled out the new Niva without a single airbag on board. However, for the first time in its history, the car is equipped with ABS. The anti-lock braking system has been a mandatory feature on all cars since 2012 in the US.