A Russian firm will buy Hyundai Motor’s manufacturing plant in St. Petersburg which halted operations in March last year, Russian news agency TASS reported Wednesday citing Russian Deputy Prime Minister, Industry and Trade Minister Denis Manturov.

The minister was quoted as saying, “We have already formed all decisions on Hyundai’s acquisition. At least what the company has announced itself. This is why a decision will be taken shortly. A local company will be the purchaser.”

According to the report, the deal includes a two-year option for the South Korean automaker to buy back the facility.

"As far as Hyundai is concerned, it plans a (buyback) option, though considering the president’s decree, it is limited to two years," said Manturov.

A Hyundai Motor official in Seoul explained that the company is looking at various scenarios and exploring different options in regard to the Russian plant.

Hyundai’s St. Petersburg site was built in 2010 and began production a year later as the automaker’s sixth overseas manufacturing foothold. The plant produced the Hyundai Solaris, Hyundai Creta, Kia Rio and Kia Rio X-line models with an annual production capacity of about 230,000 units.

The Hyundai Solaris even took the title of bestselling car in Russia in the first half of 2016, with over 45,000 units sold. The Korean automakers’ popularity continued to grow. Hyundai and Kia vehicles became popular in the local market as the Korean automaker became the biggest auto manufacturer in the country in 2018, accounting for about one-quarter of the total market share.

In 2020, the automaker tried to expand Russian production by acquiring General Motors’ factory in St. Petersburg which had a capacity of up to 100,000 vehicles per year.

Hyundai, however, suspended operations at the Russian plant in March when the conflict between Russia and Ukraine began, citing difficulties with component supplies. The automaker’s local sales dropped sharply since then.

According to the Association of European Business, Hyundai Motor only sold about 45,000 units in Russia last year, a big falloff from the company’s previous annual figure of 200,000 vehicle sales there. As of August, the company’s sales hit an all-time low as it logged only six vehicles sold in the month.

Other global automakers such as Toyota and Volkswagen have all left Russia early. Hyundai is the only foreign carmaker remaining in the country.

"Hyundai probably does not want to give up the Russian market altogether but it does not have many options for now with the prolonged war," said an auto industry official.

"They will look into the two-year buyback option because their cars were selling well before the war. But as no one can predict when it will be over, they will have to consider geopolitical uncertainties."