Post-sale times are coming for Kia
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The Korean Kia sees the risks of a “collapse” of the Russian market and may limit work in the country with after-sales service. Analysts say that the current volume of auto sales in the Russian Federation at the level of 40,000 cars per month corresponds to demand, which may further decrease “taking into account the political situation.” According to Kommersant’s sources, the investments of Korean concerns in the development of production in the Russian Federation have not yet paid off, so they can postpone the decision to leave, but they will be forced to make it when the funds run out.
Kia vice president Choo Woo-jeong, whom he quotes Bloomberg, on October 25, announced the risks of increased volatility in Russia in 2023 and the “collapse” of the market. “We might consider just doing aftermarket because we just can’t ship cars there,” he added.
Sales of Kia in the Russian Federation showed the largest drop in the third quarter among other markets of the concern – by 74.6%, to 14 thousand units, follows from the reporting. This is only 1.9% of total sales against 8.33% a year earlier.
According to the results of nine months, the drop was 64.4%, to 57 thousand units. According to the AEB, only 3.3 thousand Kia cars were sold in the Russian market in September, which is 81% less than a year earlier (.pdf). The entire market decreased by 59.6% to 46.7 thousand units.
Kia cars were produced in the Russian Federation at the Hyundai Motor Manufacturing Rus (HMMR) plant in St. Petersburg, which is now stopped, and at Avtotor in Kaliningrad, where the production of Korean cars ceased in September. Drome wrote about the additional assembly of machines on the XMMR during all the months of downtime until September, but they allegedly remained incomplete due to logistical difficulties and the inability to supply part of the electronic parts to the Russian Federation. Korean media reported on a possible sale of the asset.
Kommersant’s interlocutors draw attention to the fact that Kia and Hyundai have several production assets in Russia, including the former GM plant that has not yet been launched. Their investment “obviously hasn’t paid off, so companies may be dragging their feet on leaving while waiting for the situation to improve.” But, in any case, Kommersant’s sources believe, “the financial resources of companies in Russia are limited, and sooner or later they will run out of funds to pay salaries and maintain capacities.”
Now the level of supply and demand in the Russian car market is approximately at the same level, Sergey Udalov from Avtostat believes. And the market is likely to remain in this situation for a long time, the expert believes, even if the supply increases sharply. Moreover, taking into account logistical problems, it is difficult to do this through imports, he clarifies, and parallel imports “will definitely not save the situation” due to the shortage in other markets and the unwillingness and inability to expand quotas for them.
Mr. Udalov admits that the number of buyers will gradually continue to decline “while maintaining the current political and economic situation.”
Automotive expert Vladimir Bespalov expects that “in the absence of shocks” and an increase in supply, the market will grow to 60 thousand cars per month.
However, deliveries of cars from Korea to the Russian Federation, according to the country’s customs statistics, are still taking place and have even been actively restored in recent months. So, in nine months, Korea exported cars to the Russian Federation for €628.8 million, of which in September – almost €101 million. However, this does not mean that we are talking about shipments of new cars by the official distributor. Dealers say that they receive cars of Korean brands from warehouses in the Russian Federation.
Sergey Udalov explains that new cars in the customs statistics are also those already registered and then resold within a certain time from the moment the car was released. In addition, he is aware of the popularity of supplying “relatively new” used Korean cars.
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