Hyundai, Kia take throne in Russia on decade of investment

Hyundai Motor Group, the world’s fifth-largest carmaker, topped the Russian automobile market last month for the first time since January 2017 when Renault acquired AvtoVAZ in the European country.

Hyundai Motor Co. and Kia Corp., two automakers of the South Korean group, sold a combined 31,383 units in August, raising their shares by 4.5 percentage points on-month to 27.5% in the Russian car market, according to the Association of European Business (AEB) on Sept. 26. Hyundai and Kia sold 14,106 vehicles and 17,277 automobiles, respectively.

Renault, including Lada, a brand of cars manufactures by AvtoVAZ, sold 29,127 units during the month, taking 25.5% of the market.

The French carmaker acquired AvtoVaz founded in 1996 to tap demand for new cars in Russia through Lada, the long-standing market leader in the nation for over 50 years. Lada is popular among Russians who remember the country’s heyday in the past.

Hyundai and Kia built a car factory in ST. Petersburg in 2011, which can produce 200,000 cars a year, to expand their presence in Russia. But US economic sanctions on Russia in 2014 and low crude prices slammed the country’s auto market, causing some global makers such as General Motors Co. to give up business there.

On the other hand, Hyundai and Kia aggressively launched new subcompact models such as the Solaris, or Accent, as well as the Rio, continuing operations of the plant. In 2016, Hyundai launched the Creta, a subcompact cross over sport utility vehicle, to attract growing demand for the segment.

HIGHER-END BRANDS THAN LADA

“Chances will come again. We must not give up the Russian market despite difficulties,” said former Hyundai Chairman Chung Mong-koo said in 2016 when he visited the ST. Petersburg factory.

Hyundai and Kia improved brand images of cars with better performance than Lada to capture the market that eventually recovered. Russians saw Hyundai and Kia as higher-end brands than Lada, according to Automotive News.

In the first eight months of the year, the Rio, the Creta and the Solaris were ranked second to fourth best-selling models in Russia with 56,585 units, 49,548 units and 42,582 units sold, respectively.

Hyundai Motor Group expanded the Russian business further, bought a plant with a capacity of 100,000 units a year from GM in late last year in Shushary in the suburbs of St. Petersburg.

Hyundai Wia Corp., an auto parts maker of the group, on Sept. 9 completed a factory in St. Petersburg to produce engines for markets not only in Russia but also other European countries.

“Hyundai and Kia expanding their dominance in the global market with strong performances in emerging countries such as Russia, India, Vietnam and Brazil despite a falling market share in China,” said an industry source said.

Write to Hyung-Kyu Kim at khk@hankyung.com
Jongwoo Cheon edited this article.