Foreign Automakers Shift Marketing Efforts From Russia

ST. PETERSBURG – Global automakers continue reassessing their presence in Russia as the military conflict with Ukraine continues.

Some companies are scaling back operations in the country and others are redirecting their marketing efforts to former Soviet Union satellites.

Hyundai has announced it has indefinitely suspended its RR36 billion ($624 million) plan to redevelop the former General Motors plant in St. Petersburg’s Shushary district. Initial plans called for the production of Hyundai Tucson and Palisade and Kia Sportage models at the factory.

The Korean automaker instead is expected to focus on development of its plant in Sestoretsk elsewhere in the St. Petersburg region. Operations at the plant, Russia’s second-largest with maximum annual capacity of 220,000 units, have been suspended since March 1, a week after the launch of the Ukraine invasion.

As foreign automakers suspend or terminate production in Russia – or, in the case of GM, halt exports to the country – the Baltic states and Central Asian countries once part of the defunct USSR have emerged as promising new markets.  

Wolfgang Schmid, a spokesman for Audi (pictured, below), says the German premium automaker is present “in nearly all former Soviet states, where we are continuously working on increasing our market share and exploiting our market potential.

“Of the former Soviet states, particularly hopes of the company are put on the Baltic states (Latvia, Lithuania, Estonia), which are integral to our growth plans in the (European Union). In Kazakhstan, we are working closely together with our importer on our future plans for the market.” Schmid says.

Audi models in Kazakhstan

BMW Group spokesman Jörg Kottmeier says the German automaker operates successfully in former Soviet republics through independent importers.

Diana Dumitru, a spokeswoman for Porsche Central and Eastern Europe, says the German luxury brand has been present in the Baltic countries for more than a decade.

“The Baltic countries are fast-adapters and leaders in terms of digitalization and electrification trends, especially since the introduction of our first fully electric car, the Porsche Taycan. The development will continue following the natural pace of the market and the local opportunities for our brand,” she says.

Czech Republic automaker Škoda, like Audi and Porsche a Volkswagen Group affiliate, will continue to prioritize the Baltic markets, spokesman Tomáš Kotera says.

“We have been the No.2 brand in Estonia for the past six years and in Latvia for the past two years,” he says. “In Lithuania, Škoda ranks among the top five brands on the market. The Baltics thus represent very important markets with further growth potential for Škoda.”

Porsche also has been present for many years in the former Soviet satellite Kazakhstan, as well as Armenia, Georgia and Azerbaijan elsewhere in Central Asia, Dumitru says. “The Porsche brand is loved in these markets, and we will continue the natural development at a sustainable growth rate,” she adds.

A former distributor of Chevrolet models in Russia has said UzAuto, owned by the government of Uzbekistan, is redirecting deliveries of cars and spare parts from Russia to Uzbekistan and Kazakhstan, where the vehicles are assembled under license from GM.

Russian officials express optimism that the auto industry eventually will resume normal operations, despite the effects of economic sanctions and global automakers’ tough stance.

They include the governor of St. Petersburg, Alexander Beglov, who says Nissan, Hyundai and Toyota factories there plan to go on line soon after supply chains are restored.

Light-vehicle sales in Russia for the first five months of the year totaled 337,966, down 52% from 704,320 a year earlier, according to Wards Intelligence data. Sales in May alone were down 83.1%, to 26,280 from 155,714 year-ago.