Work has begun on the construction of a new car manufacturing plant in St Petersburg. Hyundai is the latest company to join the ranks of the many foreign automotive firms in the Leningrad region.

At a ceremony to mark its first Russian plant, Hyundai’s deputy general manager Jake Jang said: “I think our product has adapted to the Russian market very well. Now it's the right time to come into this market seriously, have a local manufacturing facility and look to the future.”
 
The South Korean company is well known in Russia. The cars produced under a licensing agreement at an independent plant in Taganrog are Russia’s second most popular. But competition remains intense.

Global car producers flocked to invest after Russia boosted duties on old imports and dropped duties on car parts.

But new fears over state regulation of the Russian automotive industry have recently emerged.

A new government commission on foreign investments in strategic sectors, including car production, has provoked fears that state control could hinder future deals.

Some believe the new commission could clip the wings of global car makers and make it less attractive for them to move to Russia.

But the Russian Government says the laws are designed to increase transparency, not to block inward investment.

And the St. Petersburg Governor Valentina Matvienko says the law actually clarifies the rules of the game.

“These laws should do nothing but help to fully realise Russia’s investment potential, should help create favourable conditions for both foreign and local companies. They will actually guarantee the security of foreign investments,” Matvienko said.

Other analysts also argue foreign car manufacturers may reap benefits from the law. Hyundai has seen its sales growing by over 35 per cent in Russia this year.