Restart of Hyundai Manufacturing Rus in St. Petersburg under new arrangements
The restart of the Hyundai Manufacturing Rus plant in St. Petersburg is being reported by Interfax, citing the enterprise’s press service. The downtime has not been extended; the company is focusing on staff training and equipment maintenance, according to a source familiar with the situation.
In December 2023, Denis Manturov, the Russian Minister of Industry and Trade and Deputy Prime Minister, announced that Hyundai Motor would continue operating in St. Petersburg. He stated that the terms of the agreement transferring shares of the factory to the Russian entity Art-Finance LLC would be disclosed soon and that the agreement had been finalized. Manturov noted that the government commission overseeing foreign investments in Russia had already approved the deal. The minister said that the parties were refining the deal details, including a potential buyback option, and that an early restart of automobile production at the St. Petersburg facility was being explored by Art-Finance together with industrial partners.
The Hyundai side also required the inclusion of an article about the possibility of repurchasing the facility within two years. Additionally, Hyundai must meet its obligations regarding warranty and service maintenance for vehicles in the Russian Federation. The transaction was symbolically valued at 140 thousand won, roughly equal to 10 thousand rubles. Current estimates place the facility’s actual value at about $220 million.
Who’s involved?
The Art-Finance legal entity previously acquired Volkswagen Group’s Kaluga plant, which was later renamed AGR LLC. Media sources connect Art-Finance with the Avilon automobile group. Hyundai’s plant has operated in St. Petersburg since 2010, with a production capacity of up to 200,000 cars per year. Before production paused in March 2022, the factory produced Hyundai Creta and Solaris models, as well as Kia Rio and Rio X-Line.
Industry experts interviewed for this piece suggest that the restart of production could involve the return of Korean-brand cars without formal branding or a shift to assembling Chinese-made vehicles using a large SKD cycle. An independent consultant notes that Hyundai and Kia have been reluctant to let go of the St. Petersburg assets due to their scale and cost, and that the new owner may partner with Chinese manufacturers or operate under a white-label arrangement. Some observers believe a non-branded sale could allow the factory to resume output without branding ties to Hyundai or Kia.
Analysts recall that after production halted, around 70,000 car kits for Hyundai and Kia remained at the plant. The belief is that a new owner will assemble cars from those kits within the next 18 to 24 months and sell them under a different brand. A return of Korean production is anticipated within two to three years, though the exact deal details remain undisclosed. The non-monetary nature of the deal is viewed by some as a strategic concession by the Koreans to preserve the facility’s value. It is suggested that the plant may operate with the Korean management approach continuing behind the scenes, with production expected to resume as soon as February or March of the upcoming year.
There is discussion about producing Hyundai and Kia vehicles in St. Petersburg under a potential GAC brand, but no formal agreement has been signed. Art-Finance might also reach terms with another Chinese automaker or establish a brand registered in its own name. Creating a new brand is seen as costly due to marketing requirements and consumer recognition challenges. Some industry voices believe that keeping familiar Korean expertise on site will help restore production more quickly, retaining the established quality and processes under a familiar management framework.
Overall, observers expect a staged restart, leveraging existing toolkits and plant infrastructure, with plans to reintroduce vehicle assembly in the near term while exploring branding and partnership options for the longer term. The timeline remains contingent on regulatory approvals, supplier readiness, and the successful alignment of the involved parties on the buyback mechanism and production strategy.