MOSCOW: South Korea’s Kia Corp sees volatility rising in Russia with the prolonged war in Ukraine, and in a worst-case scenario, may shutter its business entirely, an executive said Tuesday.
“If you ask me one negative factor for sales, I’d say volatility in Russia may accelerate next year and the automobile market itself may completely shut down for a while,” Woo-Jeong Joo, Kia’s executive vice president, said during an earnings call. “We may consider doing an after-service business only because we basically can’t supply cars there.”
Kia’s sales in Russia plunged almost 65% this year through September with around 57,000 cars delivered in the nation versus a 4.1% decline in sales globally. Kia makes cars in Russia at a plant in St Petersburg run by affiliate Hyundai Motor Co. The facility has an annual capacity of 200,000 cars and employs some 2,200 workers, according to Hyundai’s website.
Kia on Tuesday reported operating profit for the third quarter that missed average analyst estimates. The automaker would join a long list of companies also winding down their exposure in Russia after its invasion of Ukraine in late February. Mazda Motor Corp is considering a permanent exit, the Japanese firm said last month, while Toyota Motor Corp has also said it will cease vehicle manufacturing there.
Kia was the No 2 most-popular auto brand in Russia last year with its models commanding a share of about 12%, trailing local rival Avtovaz PJSC, according to Samsung Securities Co. Hyundai ranked third with an 11% share.
Joo also said that supply-chain disruptions in Russia and in China are expected to continue in the fourth quarter. He declined to comment when asked if Hyundai was planning on selling its plant in Russia. Kia’s 2021 sales in the nation accounted for around 6% of its total, according to Samsung Securities.