South Korea's auto giant Hyundai Motor Co. will establish an R&D center in Russia at a cost of 16.6 billion rubles ($241.5 million) to better respond to the needs of the country that has emerged as its key market amid overall sluggish overseas sales.
Hyundai Motor said Wednesday that it has inked a special investment contract with the city government of Saint Petersburg in Russia on Tuesday (local time). Under the agreement, the automaker will spend 16.6 billion rubles to set up an R&D center and develop new car models in the Russian city over the next 10 years.
The investment will be limited to R&D related projects, although Russian state media outlet TASS on Tuesday reported the company's production subsidiary in Russia would start producing engines in 2022. A Hyundai Motor official said the company is yet to decide on turning out engines and transmissions in Russia. The company already has an auto plant in Saint Petersburg but it does not make engines.
Russia remained as a solid revenue source for Hyundai Motor whose global sales have slumped due to sluggish performance in the United States and China.
Auto sales in the country jumped 14 percent to 163,194 units in January-November this year from the same period last year. Its sibling Kia Motors Corp. also saw its sales in the country soar 24 percent to 209,503 units over the same period. Their combined auto sales in Russia are expected to top 400,000 units this year.
Kia Motors and Hyundai Motor ranked the second and third, respectively, in Russian auto market based on the January-November auto sales this year, elbowing out France's Renault, Germany's Volkswagen, and Japan's Toyota. No.1 was Russia's local auto brand Lada.
On Thursday, Hyundai Motor shares finished 1.25 percent lower at 118,500 won ($105.76).