Hyundai starts laying off Russian plant employees

ST. PETERSBURG. Dec 20 (Interfax) - The Russian plant of South Korean automaker Hyundai, Hyundai Motor Manufacturing Rus LLC (HMMR) in St. Petersburg, has begun laying off employees.

"Due to the ongoing suspension of production processes, Hyundai Motor is taking steps to optimize staff in Russia. The company will fulfil all social obligations to employees whom this will affect, including payment of severance to those who resign by mutual agreement," the company's press service told Interfax.

South Korean newspaper Tona Ilbo, citing sources, reported in October that Hyundai was considering selling its plant in Russia due to the inability to conduct normal financial activities. Among other things, the company's ability to transfer money between its central office and the Russian branch was limited.

The automaker's St. Petersburg plant suspended operations on March 1 this year due to problems with supplies of components. Hyundai continued to assemble cars at the Avtotor plant in Kaliningrad for a time but then suspended assembly there as well. However, Hyundai continued to pay employee salaries and maintain the plant, paying taxes and water and electricity bills.

Tona Ilbo said it may be difficult for the automaker to leave the Russian market because of investments made in development. For example, Hyundai closed a deal to buy the former General Motors plant in St. Petersburg in early November 2020. In June of this year, the newspaper Delovoy Peterburg, citing a source, reported that Hyundai had frozen a project to overhaul the plant. The reasons for the suspension were not disclosed.

The company also opened the Hyundai Via Rus LLC engine plant in St. Petersburg in September 2021, investing an estimated 15.8 billion rubles in the project.

HMMR began operations in St. Petersburg in September 2010. The plant, which has capacity to produce more than 200,000 vehicles per year, manufactured Hyundai Solaris, Hyundai Creta, Kia Rio and Kia Rio X-Line cars.