Hyundai may lose the right to buy out a plant in Russia: deadline is near
29 December 16:50
The South Korean automaker Hyundai Motor is currently unable to exercise the right to buy back its former car plant in Russia, which was sold after the start of a full-scale war against Ukraine. The option expires in January, but the company has not yet made a final decision.
This was reported byReuters, citing an informed source, "Komersant Ukrainian" reports.
What happened
In 2024, Hyundai sold 100% of its plant in St. Petersburg to the Russian AGR Automotive Group for a symbolic amount of 140 thousand South Korean won (about $97). The deal included a two-year option to buy back the asset.
However, according to a Reuters source, the current conditions do not allow the company to exercise this right.
“This is not a situation where we can buy back shares,” said a source familiar with internal discussions at Hyundai.
The company itself confirmed that a final decision on a possible buyback has not yet been made.
War and sanctions
Although the specific reasons for the refusal are not detailed, the Reuters source directly points to Russia’s ongoing war against Ukraine as a key factor.
The Hyundai plant in St. Petersburg stopped working in March 2022, less than a month after the full-scale invasion. Before that, Hyundai, together with its affiliate Kia, was the largest foreign automaker in the Russian market.
In the face of sanctions, financial constraints, supply chain problems and reputational risks, returning to the Russian market remains extremely challenging for international companies.
Will Hyundai lose its right to return?
It is currently unclear whether missing the January deadline will mean a permanent loss of the buyback right or whether the parties will be able to agree to extend the option.
Such uncertainty has already resulted in a final exit for other companies. In particular, Mazda Motor did not exercise its right to buy out 50% of its Russian plant from its partner Sollers in October, losing the option.
What other automakers are doing
According to Reuters:
- Renault, Ford, Nissan, and Mercedes-Benz still have options to buy back assets in Russia, which expire in 2027-2029.
- Toyota and Volkswagen have sold their Russian assets without any rights of return.
According to the Foreign Intelligence Service of Ukraine, the share of profitable companies in almost all industries in Russia has decreased, which complicates both the work of local businesses and the prospects for the return of foreign investors.
