Hyundai, the South Korean automaker, cannot move forward with buying back its former production plant in Russia if the war in Ukraine persists, a source told Reuters.
The contractual option allowing the company to buy back the asset is due to expire in January.
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Hyundai and its affiliate Kia sold the St Petersburg plant in 2024 to Russia’s AGR Automotive Group for Won140,000 ($97), after halting production in March 2022.
Operations were suspended shortly after Moscow’s invasion of Ukraine, which triggered extensive Western sanctions that disrupted supply chains and payments.
The sale agreement included a two-year clause enabling Hyundai to repurchase 100% of the facility, set to lapse in January 2026.
Hyundai said at the time it would record a Won287bn impairment charge from the disposal.
“It is not a situation where we can buy back the shares,” the source said, requesting anonymity because of the sensitivity of Hyundai’s internal discussions.
Hyundai told Reuters in a statement that it has not yet reached a definitive decision regarding the share buyback option.
While the source did not outline all the obstacles to exercising the option, he pointed to the ongoing conflict in Ukraine, with fighting continuing despite diplomatic efforts and US and EU sanctions on Russia remaining in place.
It is unclear whether failure to meet the January deadline would permanently cancel the buyback right or whether an extension could be agreed.
Before the sale, the St Petersburg plant ranked among the biggest car factories in Russia owned by an overseas company, capable of turning out over 200,000 Hyundai and Kia vehicles annually.
In 2019, the two brands together delivered more than 400,000 vehicles in the Russian market, accounting for around 23% of all new-car sales, with approximately half of those units manufactured within the country.
The plant now produces vehicles under the Solaris name, previously used by Hyundai in the Russian market, as Chinese marques gain ground in the country’s automotive sector.
Earlier this month, Hyundai Mobis, the main parts supplier to Hyundai Motor Group, announced the expansion of its R&D operations in India to meet growing global demand.
The company is setting up a new R&D facility in Bengaluru focused on software and infotainment systems for global customers. This centre will work closely with its main R&D hub in Hyderabad, opened earlier this year.
