Hyundai Motor’s Russia to Ship Cars to Georgia and Tunisia

By Marina Romanova

Hyundai Motor’s Russian plant in St Petersburg will start exporting Russian-assembled cars to Georgia and Tunisia this month, the company said in its statement yesterday.

The world’s fifth-biggest automaker will ship the Solaris, its flagship model in Russia, to Tunisia and its Accent and Creta models to Georgia. Creta will also be exported to Kazakhstan, Belarus, Ukraine and Georgia and to the Middle Eastern Egypt and Lebanon.

Hyundai Motor’s Russia started producing its second model, Creta crossover, at company’s St Petersburg plant this August. Following an upgrade which cost the equivalent of US$100 million, Hyundai has now added production of the Creta crossover to the facility which formerly built only the Solaris small car.

Both Creta and Solaris are manufactured on the same line, with Hyundai Motor’s Russia planning annual production of 20,000 units of the newer model, company press release says. 2,500 cars so far were exported by Hyundai’s Russia to ex-Soviet nations from January to July of this year.

The Solaris was Russia’s best-selling car in the first half of 2016, with 45,930 vehicles delivered, ahead of the number two nation’s own Lada Granta (43,967). Numbers for July are not yet available but at the half way point, the local market had almost halved within two years, plunging from 1,229,931 units in H1, 2014 to just 672,140 during the first six months of 2016, www.just-avto.com reports.

The Creta was initially built in and for China, but Hyundai added production in India from mid-2015 and in Russia. Production in India was lifted to 13,000 cars a month in March 2016. This was due to demand from local buyers and those in certain export markets; India’s Creta offers the choice of 1.6-litre petrol and 1.4- and 1.6-litre diesels. A model that will be similarly sized to the ix25 and Creta is also under development for Europe and it will be built in Turkey.

According to the Russia’s Federal Customs Service statistics, for the first 6 month of this year, Hyundai Motor’s Russia exported 33, 4 thousand cars for US$504, 2 million which are almost 32 percent less than the number of cars shipped for the same period of the last year. Two thirds of shipped cars – 22, 9 thousand cars for US$247, 5 million – were sold to former Soviet republics, while 10, 5 thousand for US$256,8 million were exported to so-called ‘far overseas’ countries.

With no immediate signs of recovery, Korean Duo are expected to sell a combined 260,000 to 270,000 vehicles in Russia for the whole year, about 100,000 vehicles less from 2013, their best year selling 379,171 vehicles.

In 2015, combined sales of two Korean car manufacturers in Russia plunged 13.5 percent on-year to 324,701 cars, though their combined market share there advanced 4.8 percentage points from a year earlier to 20.3 percent. The drop in sales was attributed to a 35.7 percent contraction in Russia’s automobile market. However, other global automakers have suffered much steeper falls in sales.

Russia’s auto industry is forecast to fall 10 percent in 2016, following the impact of the country’s economic crisis brought on by the collapse in oil prices and Western sanctions over the Ukraine conflict.

Currently, Kia and Hyundai are the second and third-largest carmaker in Russia, following the nation’s own brand Lada. Their combined market share stood at 20 percent — Kia’s 10.4 percent and Hyundai’s 9.6 percent.

“We must not give up the Russian market even if there are some difficulties now,” Chung Mong-koo, chairman of South Korea’s Hyundai Motor Group, said while meeting with South Korean and Russian officials in Russia earlier this month, the automotive company said in a press release. Mr Chung called for stepped-up efforts to develop new products and marketing strategies for the Russian market.

Hyundai officials and market observers believe the two South Korean automakers’ sales will likely drop again this year as Russia’s automobile market continues to shrink.

Demand for new cars from Russia’s industrial sector alone was expected to more than halve from 2.94 million cars in 2012 to less than 1.4 million this year, they said.

“We must be thoroughly prepared in terms of our products and marketing strategies so that our products will be recognized as the best in the market when the Russian market recovers,” the Hyundai Motor chairman was quoted as saying.

In 2015 South Korean-Russian bilateral trade volume decreased by 38 percent and reached US$16.0 billion compared to US$25.8 billion in 2014 mostly due to contraction of the Russian economy and ruble devaluation. South Korean exports to Russia fell to US$4.7 billion (by 54 percent) while imports fell to US$11.3 billion (by 28 percent), Russian Export data says.

2015 data showed a significant rise in Russian exports to South Korea of pearls, precious stones, metals, coins (+195 percent). At the same time the exports of ores, slag and ash showed a significant fall (-80 percent).

South Korean president Park Geun-hye will participate in the Eastern Economic Forum (EEF) on September 2nd and 3rd in Far Eastern Vladivostok, Russia, and will hold summit talks with her Russian counterpart Vladimir Putin. This year’s forum will be attended by leaders and high-profile officials and businesspeople from Japan, China and the ASEAN nations.

“The two leaders are expected to exchange opinions on various issues of common interest and to offer opportunities to develop the cooperative partnership between Seoul and Moscow in a stable manner,” Korea Net quoted presidential office as saying.

South Korea along with China, India, Singapore and Hong-Kong, never impose economic sanctions against Russia.

Russian Empire and Korea first established formal diplomatic relations in 1884, after which Russia exerted considerable political influence in Korea. In particular, in 1896, the Korean royal family took refuge from pro-Japanese factions in Seoul at the Russian diplomatic compound.