The Russian government has approved the sale of General Motors‘ St. Petersburg Assembly plant to South Korean automaker Hyundai.
Last week it was revealed that Hyundai had agreed to purchase the defunct assembly plant from GM for an undisclosed sum, but the transaction was still pending the approval of the Russian anti-trust body. At the time, the company said the government would “decide whether Hyundai will move to the next step after reviewing the documents,” in the coming days, with Russia giving the sale the green light on Wednesday.
According to The Korea Times, Hyundai has purchased a 94.83 percent stake in the plant. The automaker still has to negotiate a final price with GM for the facility, the publication also said, and has other government requirements it must meet before taking full ownership of the facility.
Hyundai and its Kia brand have seen strong sales in Russia in recent years as the country’s economy continues to rebound. The two brands sold a total of 404,710 vehicles in Russia in 2019, making Hyundai/Kia the best-selling automaker locally. The Korean company even outpaced local automaker Avtovaz, which only managed to move 362,352 vehicles in 2019. Avtovaz owns the rights to the long-standing Russian vehicle brand Lada.
“The Russian automobile market is showing signs of a solid recovery following government’s policies to boost the economy and support the automobile industry,” Hyundai said in a statement sent to The Korea Times this week. “This is leading to a recovery in Hyundai Motor sales there. For instance, we have raised the price of the Creta crossover twice to protect profitability following oil price declines, but the model is still popular.”
In a previous statement, Hyundai said it planned to “expand market share and defend profitability with the Creta SUV at the center,” in Russia throughout 2020. The Creta, a front-wheel-drive subcompact crossover, is sold as the Venue in the United States and Canada.
The GM St. Petersburg plant was built at a cost of $300 million back in 2008 and was closed in 2015. The plant produced the Chevrolet Cruze, Opel Astra and global Chevrolet Trailblazer and had an annual capacity of around 100,000 units.
While GM maintains a small presence in Russia, it only sells vehicles under the Cadillac luxury brand in the country. Cadillac vehicles sold in Russia are not made there, but rather shipped in from outside GM plants.
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Comments
Wow yet again GM retreats and sells out to a competitor who can obviously see value in these markets, is this a wise strategy?
It’s not that GM doesn’t see value in a market. The question is is there enough value in the market? From a company health standpoint is it better to sell 7 million vehicles a year and make a 2% profit, or 5 million and make say a 6% profit? So when things like 2008 or Covid-19 occur 7 million can go to 4 million and that 2% profit becomes a loss whereas if they were healthier (out of less profitable markets) there might still see a profit even with less sales overall.
Although you may be correct, but I do believe a company like Hyundai could make that 6% profit In that market, I’m no fan of Hyundai what so ever, but gotta give them credit for being much more efficient then GM in less profitable markets while adapting and developing new technology at rapid speeds.
Mary Barra is still trying to “right-size” GM and shrink her way to more profits.
I remember a GM exec being asked “Which automaker scares you the most?” and their reply was Hyundai which was, at the time, the purveyor of super-cheap, disrespected cars. I thought it an interesting response back then when the obvious answer seemingly would have been Toyota. The reply has proved prescient. Hyundai seems to take everything GM gives up.
It’s the right thing to do. Get bigger just to be bigger got them no where outside of bragging rights. Toyota is bigger, but no one sees them as “leading”. The same holds true for VW as well right now. VW is trying to change their imagine with EVs.
GM exited Russia because of trade sanctions automatically applied by US Congress.
GM licensed vehicles are supplied to Russia from UzAuto in Uzbekistan under the Chevrolet brand.
Instead of quitting wherever GM can’t make money, the stockholders need to replace mary Barry and the other clowns with leaders who can.
This plant wasn’t producing for GM for several years already.
Could it be that it had been used by Hyundai for some time before now purchasing it for good?
I remember a story in a South Korean newspaper in last year about transport of Hyundai parts from Sout Korea via ship, going the long way thru the Malakka Strait, the Suez Canal, Gibraltar, North Sea, Baltic Sea and then finally St. Petersburg, and then another route: first via ship to Vladivostok and from there by rail via the Trans-Siberian Railway (Transsib) all the way to Petrograd, saving weeks of time.
Even faster and cheaper would be if they could go via rail thru North Korea, China, Mongolia and joining the Transsib at Ulan Ude, a further dramatic save of time and money. Unfortunately, this is being blocked by the US military.