SEOUL — South Korea’s Hyundai Motor is considering options for its suspended Russia operations that could include selling its manufacturing plant there, South Korean media reported on Tuesday.
Many factories in Russia have suspended production and furloughed workers due to shortages of high-tech equipment because of sanctions and an exodus of Western manufacturers since Moscow sent armed forces into Ukraine on Feb. 24.
Hyundai Motor recently submitted to management a report analyzing its future prospects in Russia due to the difficult operating environment, Dong-a Ilbo newspaper said, citing an unidentified auto industry source.
Hyundai Motor was not immediately available for comment when contacted by Reuters.
Hyundai Motor, which together with affiliate Kia Corp. is among the world’s top 10 biggest automakers by sales, builds about 200,000 vehicles per year in Russia, about 4% of its global production capacity.
“We estimate that Hyundai and Kia together could generate at least a 450 billion won ($315 million) loss this year due to the business environment in Russia,” said Esther Yim, an analyst at Samsung Securities.
Hyundai Motor suspended operations at its Russian factory in March and a regulatory filing from the company showed it sold no cars in the country in August and September.
“While it’s still unclear what Hyundai would do with its Russia factory, Hyundai has a lot to factor in to actually exit from Russia, such as financial situations and its relationship with Russia and the United States,” said Kim Jin-woo, an analyst at Korea Investment & Securities.
Last week, Nissan Motor Co Ltd 7201.T said it would hand over its business in Russia to a state-owned entity for 1 euro, taking a loss of about $687 million in the latest costly exit from the country by a global company. — Reuters