hankyoreh

A marketing image for Hyundai Motor's factory in Russia. (from Hyundai Motor Company website)

Hyundai Motor Co. plans to accept the equivalent of 140,000 won (10,000 rubles) to withdraw from its factory in Russia, which has stopped operating amid the current war.

In an ad hoc meeting of its board of directors Tuesday, Hyundai Motor approved a motion to sell off its stake in the Hyundai Motor Manufacturing Rus factory in the Russian city of Saint Petersburg.

The company explained that it is currently negotiating the specific conditions for the factory’s sale to the Russian business Art-Finance. In consideration of the situation in Russia, it plans to continue providing after-sales services for previously sold vehicles.

Operations at the Russian factory have been suspended since March 2022 due to Russia's invasion of Ukraine.

Hyundai Motor said the selling price for the factory would be 10,000 rubles, or around US$107. Based on the factory’s accounting situation, the value of the company’s stake is 287.34 billion won, but Hyundai Motor concluded that it had suffered a loss of 1.13 trillion won in light of the two years the factory has been unable to operate because of the war.

The facilities that are to be sold off include the Saint Petersburg factory, which was built in 2010, and a General Motors factory acquired in 2020. They are respectively capable of producing up to 200,000 and 100,000 vehicles per year.

Hyundai Motor also said it had included a buyback option in the contract, which would allow it to repurchase its stake in the Russian plant at a later date.

“According to guidance from the Russian government, [Hyundai Motor] can exercise [this right] within a two-year period,” a Hyundai Motor official said, adding that it was “not clear whether it can be recovered.”

Other automakers such as Nissan, Renault and Mazda have similarly withdrawn their assets from Russia, handing them over to the Russian government, state-run enterprises, and local joint ventures on the condition that they may be repurchased within a certain timeframe. Renault transferred its assets for the equivalent of US$20, while Nissan and Mazda transferred theirs for US$1 each.

Since early this year, many reports had indicated that Hyundai Motor was coordinating with a Kazakh business on the factory’s sale. But the Kazakh sale fell through after the Russian Ministry of Finance insisted that investors from “unfriendly” countries would have to pay taxes of up to 10% of the market value for business entities they sold off.

By Choi Woo-ri, staff reporter

Please direct questions or comments to [english@hani.co.kr]