South Korean automaker Hyundai is unable to buy back its former production plant in Russia due to the ongoing war in Ukraine. At the same time, the buyback option is likely to expire next month. This is reported by Reuters, citing a source familiar with the situation, writes UNN.
Details
As the publication notes, together with its "daughter" Kia, Hyundai was previously the largest foreign automaker in Russia. However, in 2024, the company sold its plant in St. Petersburg. The plant's operations were halted in March 2022 — a month after Russia's invasion of Ukraine, which triggered a wave of Western sanctions and disrupted supply chains and payments.
The deal, under which Hyundai sold 100% of the plant to the Russian AGR Automotive Group for a symbolic 140,000 won ($97), included a two-year buyback option. This clause expires in January.
"This is not a situation where we can buy back the shares," said a source familiar with Hyundai's internal discussions, asking not to be named due to the sensitivity of the topic.
Hyundai told Reuters that a final decision on exercising the buyback option has not yet been made. AGR Automotive Group did not respond to a request for comment.
Although the interlocutor did not specify the exact reasons for the inability to exercise the option, he pointed to the ongoing war in Ukraine. Despite US President Donald Trump naming an end to the war as one of his administration's priorities and pressuring Kyiv and Moscow for a peace deal, hostilities continue, and US and EU sanctions against Russia remain in effect.
"The war must end," the source said.
It is currently unclear whether missing the January deadline will mean Hyundai's final waiver of its buyback right, or whether the company will be able to negotiate an extension.
Due to reputational risks and sanctions that made it impossible for factories to operate, most foreign automakers left the Russian market. When selling assets in Russia in 2024, Hyundai stated that it would incur losses of 287 billion won.
Some companies, including Hyundai, sold factories to Russian entities for symbolic sums, retaining a buyback option in the hope of returning someday. Most of these enterprises now assemble Chinese cars under Russian brands, while the Hyundai plant produces cars under the Solaris brand — the former name of the popular model of the Korean manufacturer for the Russian market.
Japanese Mazda Motor became the first company to lose its buyback right in October, refusing to exercise the option to buy back 50% of its Russian plant from its former partner Sollers. Renault, Ford, Nissan, and Mercedes-Benz also have buyback options that expire between 2027 and 2029. Toyota and Volkswagen sold their assets without any buyback rights.
Before leaving Russia, the Hyundai plant in St. Petersburg was one of the largest foreign automotive enterprises in the country, with a capacity of more than 200,000 Hyundai and Kia cars per year. Hyundai and Kia, in which Hyundai owns about 35%, were the largest foreign players in the Russian market before the war in Ukraine. In 2019, they jointly sold more than 400,000 cars — about 23% of all new car sales in Russia, ahead of the largest local manufacturer AvtoVAZ. Approximately half of this volume was produced directly at the Russian plant.
Russia's automotive sector, once considered one of the most promising in Europe, is showing weak signs of recovery this year. The market is now dominated by Chinese companies, which sold almost 1 million cars in Russia in 2024 out of a total sales volume of 1.57 million units.
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