THE KOREA ECONOMIC DAILY, GLOBAL EDITION

Hyundai Motor Co.'s car exports to Russia have dwindled by nearly half in the latest indication that global automakers are feeling the pinch due to the global logistics and supply chain disruptions caused by the Ukraine crisis.

According to the top South Korean automaker on Monday, its vehicle exports to Russia stood at 2,714 units in February, down 41.1% from 4,611 units in January. From the year-earlier period, Hyundai’s car exports to Russia fell 21.8% last month.

The company’s overall exports to global markets in February declined 2.1% from the previous month.

“Most automakers around the world have stopped shipping their cars to Russia since last month. Hyundai is no exception,” said a local industry official.

Kia Corp., another automaking unit of Hyundai Motor Group, didn’t reveal figures for its export volume to the Russian market, but industry officials said the company must also have been affected.

In Russia, Hyundai Motor has since 2010 been running a manufacturing plant in St. Petersburg, building some 230,000 units of cars annually.

In 2020, it also acquired a General Motors factory with an annual production capacity of 100,000 units in the port city on the Baltic Sea. At the plant, Hyundai also produces the Kia Rio, a subcompact sedan.

SECOND-HIGHEST EXPOSURE TO RUSSIA

According to IHS Markit, Hyundai and Kia, the two largest Korean automakers, are the No. 2 player there when combined, following the Russian market leader Renault Group.

Other major foreign automakers operating in Russia include German automaker Volkswagen and Japan’s Toyota Motor.

With the escalating Russia-Ukraine crisis, Hyundai Motor has also halted its St. Petersburg plant operations since March 1 as the war disrupted or entirely suspended imports of automotive parts into Russia.

Hyundai sold 7,402 vehicles from the St. Petersburg factory to the Russian market in February, representing a mere 1.4% fall from January.

Now that the plant is put on hold, Hyundai’s auto sales in Russia are expected to fall significantly over the coming months, said industry watchers.

RENAULT HESITANT TO EXIT, VW TO LOOK ELSEWHERE

According to media outlets, about 10 automakers, including GM, Volkswagen and Toyota Motor, have either stopped exporting to Russia or suspended operations in the country.

French auto giant Renault SA, as of the past few days, has become the only major global automaker that hasn’t cut back either on trade with Russia or from production at local factories.

Renault is reportedly reluctant to exit from the Russian market as the company is worried about the high cost of pulling out from a venture with a local partner.

The French manufacturer wants to avoid the Russian nationalization of its majority-owned carmaker AvtoVaz, which plays a key role in the company’s turnaround, according to a Bloomberg News report.

Renault’s 68%-owned AvtoVaz, the maker of the Lada brand, and reliance on Russia for about 10% of its revenue are making it difficult for the French firm to withdraw from Russia, the report said.

Renault has about 30% of the Russian car market and a staff of roughly 40,000 in the country.

According to a Reuters report, VW’s finance chief Arno Antlitz told journalists on Friday that the German carmaker warned of growing risks of the Russia-Ukraine war hurting the supply chain in the auto industry.

Carmakers are scrambling to find alternative sources of vital parts made in Ukraine, including wire harnesses, from as far afield as China and Mexico, as Russia's invasion halts assembly lines and breaks complex supply chains, the report said.

Hyundai Motor will likely send Russia-bound vehicles to other markets such as India to meet its 2022 global sales target of 4.23 million units, officials said.

Write to Il-Gue Kim and Hyung-Kyu Kim at Black0419@hankyung.com
In-Soo Nam edited this article.