Hyundai Motor Group, South Korea's largest automotive conglomerate, is mulling the sale of its railway business affiliate, industry sources said Tuesday.

The group is considering selling Hyundai Rotem's loss-making railway business, according to the sources.

Hyundai Motor, the group's crown jewel, is the largest shareholder in Hyundai Rotem, having held a 33.77 percent stake as of last year, which is estimated to value around 1 trillion won ($897 million) with the management premium. 

Hyundai Rotem runs businesses in three main areas -- railway vehicles, defense products and industrial plants. Its railway business accounts for nearly half of its sales, but has been in the red for the last three years, having posted operating losses of 41.7 billion won in 2018, 259.5 billion won in 2019 and 11.6 billion won in 2020.

Shares in Hyundai Rotem jumped 3.13 percent to close at 21,400 won on the Seoul bourse following rumors that Hyundai Motor is in talks with Germany's Siemens AG over sale of its stake in Hyundai Rotem. 

Industry insiders said Hyundai Motor may also sell Hyundai Rotem's defense business. But since the sale of a defense business requires approval from the government, they speculate that the company could sell the unit to local companies. (Yonhap)