After Nissan, Hyundai too plans to shut Russia business: Reports
- Several carmakers, including Nissan Motor and Renault, have already shut down operations in Russia amid the country's war against Ukraine this year.
Korean carmaker Hyundai Motor may soon exit Russia amid continuous war against Russia that has hit hard the automotive business in the country this year. According to a report by news agency Reuters, Hyundai is likely to shut down its operations completely in Russia and also sell its manufacturing facility to the state. Reuters quoted a South Korean media, which cited unnamed sources behind the information.
Hyundai Motor had earlier suspended its operations in Russia in March this year, around the same time when Russia invaded Ukraine. The Korean carmaker did not sell any cars between August and September and is facing loss. For Hyundai, it is easier to follow suit to several other carmakers to shut down business in Russia completely to avoid any more loss.
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According to the Korean media quoted by Reuters, Hyundai is analysing its ‘future prospects in Russia due to the difficult operating environment’. Hyundai Motor has a production capacity of around 200,000 vehicles every year in Russia. The country contributes about four per cent of its overall production around the world. An exit from Russia would translate into heavy loss for Hyundai. According to analysts, Hyundai and Kia could stand to lose around $315 million (roughly converted to ₹2,584 crore).
Key reasons why carmakers have been leaving Russian shores are shortage of high-tech equipment and sanctions against Russia which have led to drastic cuts in production or suspension of work. Recently, Japanese carmaker Nissan Motor sold off its facility in Russia at a throwaway price before it announced formal exit. Several other manufacturers, like Renault, have left Russia since Moscow sent armed forces into Ukraine on February 24 this year.
Last week, Nissan Motor announced its decision to hand over business in Russia to a state-owned entity for just 1 euro. The Japanese carmaker will incur loss of about $687 million (roughly converted to ₹6,535 crore) in one of the costliest exits by a carmaker from Russia in recent times.
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