HONG KONG (Bloomberg) -- Hyundai Motor Co., South Korea's largest automaker, will invest $400 million to build its first factory in Russia to meet surging demand in the country.

The carmaker will produce 100,000 vehicles annually at the plant in St. Petersburg, the Seoul-based company said in an e-mailed statement yesterday. Construction will start in the first half of next year and completion is slated for 2010, it said.
Hyundai Motor joins Toyota Motor Corp. and General Motors Corp. in setting up factories in Russia, where a nine-year economic boom has increased car sales. The country provides an opportunity for growth for automakers as customers spent a record $16 billion on new foreign cars in the first half, fueled by rising incomes, according to PricewaterhouseCoopers LLP.
“The economic growth in Russia is encouraging people to spend more on cars, and that means setting up a plant will provide further opportunities for Hyundai Motor to increase sales,” said Song Sang Hoon, an analyst at Hungkuk Securities Co. in Seoul with a “buy” recommendation on Hyundai Motor's shares.
The South Korean carmaker didn't disclose which models it will produce at the Russian plant, which was first announced Nov. 12. Russia is the sixth overseas country in which Hyundai Motor will have a factory.
------------------Record sales
In the first 11 months, Hyundai Motor sold 130,166 of its Accent, Getz and other models in Russia, more than the 100,685 it sold during all of 2006. Sales in November reached 17,992 vehicles, its biggest monthly total in the country.
A total of 1.47 million foreign cars were sold in the first 11 months of this year in Russia, 63 percent more than a year earlier, according to the Moscow-based Association of European Business in the Russian Federation.
Toyota, the world's second-largest carmaker, plans to open a plant in December to make Camry sedans in St. Petersburg. Volkswagen AG, Europe's biggest carmaker, last month started production at its plant in Kaluga, 160 kilometers (99 miles) southwest of Moscow.
Hyundai Motor operates overseas factories in China, India, Turkey and the U.S. and is building one in the Czech Republic to meet local demand and counter the impact of currency fluctuations.
The carmaker dropped 3.9 percent to close at 69,500 won in Seoul. The stock has gained 3.1 percent this year, compared with a 28 percent increase in the Kospi index.