South Korean automotive giant Hyundai Motor is poised to let a crucial repurchase option for its former manufacturing facility in Russia lapse, a source familiar with the internal discussions has revealed to Reuters. The clause, which expires in January 2025, appears unfeasible to exercise due to the continuing war in Ukraine and the resultant Western sanctions.
The Stalled Repurchase Clause
Hyundai, along with its affiliate Kia, was once the dominant foreign carmaker in Russia. However, following Moscow's invasion of Ukraine in February 2022, the company suspended operations at its St. Petersburg plant in March of that year. The crippling Western sanctions that disrupted supply chains and financial transactions ultimately led to the sale of the facility.
In 2024, Hyundai sold 100% of the plant to Russia's AGR Automotive Group for a nominal sum of 140,000 South Korean won. A critical part of this deal was a two-year buyback option, allowing Hyundai to potentially reclaim the asset. This option is set to expire in January 2025.
"It is not a situation where we can buy back the shares," stated the source, who requested anonymity due to the sensitivity of the matter. While Hyundai officially stated to Reuters that a final decision on the buyback has not been made, the source pointed directly to the unresolved conflict as the primary obstacle. "The war should be over," the person added.
Wider Exodus and Buyback Clock Ticks for Carmakers
Hyundai's dilemma reflects a broader trend among foreign automakers who exited the Russian market. With reputations at risk and operations made impossible by sanctions, most sold their assets. Several, including Hyundai, structured deals with symbolic sale prices and temporary buyback options, hoping for a eventual return.
Hyundai recorded a financial hit of 287 billion won from the sale of its Russian assets. The company's former plant now produces vehicles under the Solaris brand, a name previously used for a popular Hyundai model in Russia. Many other sold factories now assemble Chinese cars under Russian brands.
Japan's Mazda Motor became the first to formally lose its repurchase rights in October 2024, deciding not to buy back its 50% stake from partner Sollers. Other automakers like Renault, Ford, Nissan, and Mercedes-Benz have buyback options expiring between 2027 and 2029, while Toyota and Volkswagen sold their Russian interests without any repurchase clauses.
From Market Leader to Exit
Before the exodus, Hyundai and Kia were powerhouse brands in Russia. Their St. Petersburg plant, one of the country's largest foreign-owned auto facilities, had an annual production capacity of over 200,000 vehicles.
In their peak year of 2019, the duo sold more than 400,000 cars in Russia, capturing roughly 23% of the new car market and outselling local giant Avtovaz. Approximately half of these sales were from vehicles produced domestically at the Russian plant.
The Russian auto market, once a promising European frontier, is now fundamentally reshaped. Chinese firms have filled the vacuum, selling nearly 1 million cars in 2024 alone, dominating a total market of 1.57 million units and leaving little room for the former Western and Asian leaders.
