Hyundai's Strategic Exit: Korean carmaker to sell Russian plant for token amount amid market shifts

In a strategic move responding to geopolitical changes, South Korea's Hyundai Motor is set to sell its Russian plant for a nominal 7,000 roubles ($77.67), becoming the latest global automaker to divest from Russian assets since the outbreak of the war in Ukraine.

According to Reuters, the sale, detailed in a regulatory filing, involves a significant financial setback, with Hyundai Motor anticipating a 287 billion won ($219.19 million) loss on the St. Petersburg plant, where operations were halted in March 2022.

Hyundai Motor aims to finalise the deal with Russia's Art-Finance, incorporating a buyback option into the transaction, and expects to complete the process by December 28. While the company is set to receive a total of 10,000 roubles for the sale of all its Russian assets, the move aligns with a broader trend among major automakers opting for nominal fees and buyback options, potentially leaving the door open for future returns.

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Approval from Russia's government commission on foreign asset sales, known for requiring at least a 50 per cent discount on such deals, has been granted. Russian Industry and Trade Minister Denis Manturov, cited by the RIA news agency, stated that "Hyundai and Art-Finance are clarifying the parameters of the deal, including the buyback option.”

Before the war in Ukraine, Hyundai and its affiliate Kia Corp were among the top three selling brands in Russia. However, with the global exodus of players and the influx of Chinese brands taking their place, Hyundai Motor's decision to sell aligns with the industry trend.

Art-Finance, the acquiring entity, is linked to Andrei Pavlovich, who previously acquired Volkswagen's Russian assets, according to AGR Automotive. The Auto dealer group Avilon, which supported Art-Finance in the Volkswagen deal, clarifies that it is not connected to Art-Finance and AGR Automotive.

(With inputs from Reuters)

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