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. Last Updated: 07/27/2016

Hyundai Picks St. Pete for $400M Plant

bloombergModels posing with a Hyundai car in Seoul in July. Hyundai and Matviyenko signed a plant deal Monday in Seoul.
South Korea's Hyundai has picked St. Petersburg as the site for its plant in Russia, in a move to boost its profits in the country's booming car market.

"This plant will allow us to better serve our customers and will ensure our success in one of the world's most dynamic and fastest-growing economies," Hyundai chairman Chung Mong-koo said in a statement. "Though we've performed well so far, our future prospects for growth in the Russian market depend on getting closer to our customers."

On Monday, Hyundai vice chairman Kim Dong-Jin and St. Petersburg Governor Valentina Matviyenko signed a memorandum of intent at the carmaker's head office in Seoul.

The carmaker will invest $400 million in a manufacturing operation, with construction starting by mid-2008, said the carmaker, citing the memorandum. The plant will initially produce 100,000 units annually.

Hyundai will break ground on the plant during the St. Petersburg International Economic Forum next year, Matviyenko's administration said. The plant will be located in the Kamenka industrial zone, where Japan's Nissan is also building facilities.

From January to November, Hyundai increased sales by 44 percent to 130,166 autos, becoming the country's fourth-best-selling foreign carmaker. At 47,214 units sold, its Accent model has been the country's fourth-best-selling foreign car.

Anna Belozerskaya, a Moscow-based spokeswoman for Hyundai, said construction of the plant would likely take about two years, citing the experience of companies such as Toyota in Russia.

She said the model to be produced at the St. Petersburg plant would be specifically developed by Hyundai for the country and would be a budget model that is "not in the lineup yet."

St. Petersburg beat out three other sites the company had considered.