Kia the latest automaker to mull exiting Russia
By Abimbola Mohammed
Kia motors, one of the leading automakers, would join Volkswagen, Toyota, Renault, Nissan, Hyundai, and Mazda that have or are considering winding down their exposure in Russia after its invasion of Ukraine.
Kia Corp. sees volatility rising in Russia with the prolonged war in Ukraine, and in a worst-case scenario, may shut down its business entirely.
Woo-Jeong Joo, Kia’s executive vice president, said: “If you ask me one negative factor for sales, I would say volatility in Russia may accelerate next year and the automobile market itself may completely shut down for a while, we may consider doing an after-service business only because we basically can’t supply cars there.”
Kia’s sales in Russia plunged almost 65 percent this year through September with about 57,000 cars delivered in the nation versus a 4.1 percent decline in sales globally.
Kia makes cars in Russia at a plant in St. Petersburg run by affiliate Hyundai Motor. The facility has an annual capacity of 200,000 cars and employs some 2,200 workers, according to Hyundai’s website.
The automaker today reported operating profit for the third quarter that missed average analyst estimates. The company would join a long list of companies also winding down their exposure in Russia after it invaded Ukraine in late February.
Volkswagen Group is looking for an investor to take over its factory in Kaluga, where production was halted soon after the Ukraine war began. Toyota Motor has said it will cease vehicle manufacturing in the country. Mazda Motor is considering a permanent exit, the Japanese firm said.
In the same vein, Nissan said it will hand over its business in Russia to a state-owned entity for 1 euro ($0.97), taking a loss of about 100 billion yen ($687 million). Renault decided to sell its majority stake in AvtoVAZ to a Russian science institute. The deal, however, includes a six-year option to buy back the stake.
Kia was the No. 2-selling brand in Russia last year with its models commanding a share of 12.3 percent, trailing local rival AvtoVAZ at a share of 21 percent, according to figures from the Moscow-based AEB. Hyundai ranked third with a 10 percent share.
Last year Kia had four cars in the country’s ranking of top 25 sellers, led by the Rio with a volume of 82,941, AEB numbers show.
Joo also said that supply-chain disruptions in Russia and China are expected to continue in the fourth quarter.
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