Global automakers Hyundai and Renault are considering re-establishing operations in Russia amid the possible suspension of hostilities with Ukraine.
Most international brands abandoned what had been the generally profitable Russian market not long after the country invaded Ukraine in February 2022. Supplies of new cars were provided by domestic manufacturers, Chinese automakers and via parallel imports – the so-called gray market.
But Russian and U.S. officials met in mid-February in Saudi Arabia to discuss ending the war in Ukraine and possibly lifting at least some of the sanctions imposed on Russia since the invasion.
That has piqued interest in returning to Russia by some global automakers, many of which sold their business to local partners with buyback options giving them control over their former assets.
Renault, for example, transferred its €2 billion ($2.1 billion) Russian business to the Russian government, including its 68% stake in local automaker AvtoVAZ without any actual compensation but with a buyback option within 6 years.
Renault has not ruled out returning to Russia, says CEO Luca de Meo, who tells the U.K.’s Financial Times: “I would rather focus on building the future than catching up. But we are business people. When we see an opportunity for business, we try to seize it.
“We have an option; let’s see how it goes.”
AvtoVAZ President and CEO Maxim Sokolov says that if Renault regained its stake in the Russian automaker, it would have to compensate AvtoVAZ for about RR112.5 billion ($1.2 billion) of investments made from 2022-2024.
As of March 5, the French government maintains its support for the European Union's sanctions against Russia.
Hyundai, meanwhile, is calculating its losses in Russia, once one of the South Korean automaker’s most profitable markets. According to the Renhap news agency, Hyundai is considering buying back its former factory in St. Petersburg from Moscow-based Art-Finance Portfolio Investments. Hyundai’s option lasts until December 2025.
In 2024 Hyundai re-registered its brand name in Russia, which, some local analysts say, may be part of its preparations for a return to the local market. Hyundai spokespersons were not available for comment.
Among German automakers, Volkswagen appears to be expressing the most interest in returning to Russia. VW had one of the country’s largest automaking operations at its plant in Kaluga, with annual capacity of 225,000 vehicles.
Analysts say the current stagnation of the German automotive sector is making a return to Russia an interesting option for VW and other German car companies.
Both the German government and the European Commission (EC), however, continue to uphold and implement sanctions against Russia.
Amid the thawing relations between Russia and the U.S., some local analysts have not ruled out the possibility of American automakers such as General Motors and Ford returning to Russia, despite having left the market years before the onset of the Ukraine conflict. The Russian government and President Vladimir Putin have said they would be interested in the return of foreign automakers, particularly those from the U.S. to the domestic market.
U.S. automakers would have to weigh the benefits of returning to Russia, however, as public opinion is running strong against Russia and in favor of supporting Ukraine despite the Trump administration’s apparent desire to broker an end to the war with Russia keeping lands it invaded Ukraine to claim. U.S. automakers could face boycotts at home if they re-entered the Russian market.
