Hyundai Vice Chair flies to Russia

By Park Jin-hai

Chung Eui-sun vice chairman

Hyundai Motor Vice Chairman Chung Eui-sun departed for Russia to establish contingency plans against the worsening productivity of its Russian plant on the heels of the falling ruble.

The Russian auto industry has been hit hard in the wake of the recent global economic slump. Coupled with the collapse of the ruble, global auto giants have taken steps either to reduce their production or to stop operations there.

General Motors retreated from Russia, stopping operations at its local assembly plant.

However, Hyundai Motor has been taking the opposite course.

Chung has ordered its Russian officials to expand its market share in preparation for when the Russian economy starts to rebound.

Last year, Hyundai and its sibling firm Kia Motors sold a total of 374,000 cars in Russia.

In order to buffer the effects of the falling ruble, Hyundai has lowered its exports to Russia to less than 10 percent, while running its Russian plant at maximum capacity.

Previously Hyundai’s exports to Russia accounted for 40 percent of total sales made in the country. As Hyundai’s rivals reduced their sales there, Hyundai’s market share in Russia during the first three months of this year was 19.8 percent, up 5.9 percent from the same period last year.

“Chung’s Russian visit is aimed at sounding out the local market to turn challenges into opportunities. After touring its plant in St. Petersburg, he will devise countermeasures to face the sluggish local economy,” said a company official.

Hyundai’s sales in the first quarter were 39,800, down 4 percent, and Kia was 36,000, down 15 percent.

In comparison, Russia’s total automotive sales were 3,836,000, down 36.3 percent.

Shin Chung-kwan, an analyst at KB Investment & Securities, said that given the Russian government’s moves to support the local auto industry and Hyundai rivals’ production reduction, Hyundai’s expansion of its Russian market could place the Korean automaker in position to emerge into the second-largest carmaker in Russia.

Citing research that predicted the recovery of Russian economy in the latter half of this year, Chung said, “Hyundai and Kia will retain the Russian production at this level and through exports to Russia’s neighboring countries, they will try to improve the profitability.”