SEOUL, 09 Feb. (Yonhap) – Jose-Vicente De Los Mozos, vice president in charge of manufacturing and supply chain at Renault SA said on Tuesday that its South Korean operations need to increase production and lower manufacturing costs to keep up afloat against the backdrop of the new coronavirus crisis (Covdi-19).
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He made the remarks in a video message sent to workers at the French automaker’s only factory in Busan, 450 km southeast of Seoul.
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Last year, Renault Samsung Motors Corp. pledged to improve the productivity of the Busan plant to ensure the manufacture of XM3 SUVs for the European market. So the Renault group decided to assign the plant to produce most of the XM3s for international sales in September, Mozos said.
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“But Renault Samsung did not keep its promise until the end of 2020 and the unit production cost of the XM3 at the Busan plant is twice that of the Captur SUV at the Spanish plant (from Renault ) ”, Said the vice-president.
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“This clearly shows that the Busan plant is lagging far behind (other Renault plants in terms of productivity and costs). Problems must be resolved immediately. ”
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The XM3 and Captur share the same platform, and the XM3 is sold as New Arkana in Europe.
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In January, Renault Samsung went into emergency management mode in a context of a pandemic and announced a plan to reduce the number of executives from 40% to 30 people and their salaries by 20%. He also offered a voluntary retirement program to employees as part of the restructuring.
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The Korean unit reported an operating loss for the first time in eight years last year, as sales tumbled 35% to 116,166 vehicles, from 177,450 units the year before.
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Its local sales increased 11% to 95,939 units from 86,859 a year earlier, but exports fell 78% to 20,227 cars after being 90,591. The decrease was mainly caused by the suspension of production of Nissan’s Rogue SUVs at the Busan plant in March of last year.
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In addition, Renault Samsung suspended the operation of the Busan plant from September 25 to October 18 and a few days in November and December to manage its stocks amid weaker demand for its vehicles.
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The company and its union have yet to sign a wage agreement for 2020, which affects production plans and vehicle sales.
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Earlier this month, unionized workers voted for industrial action to demand a revised wage offer from the company and to protest the restructuring plan.
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The manufacturer’s current lineup includes the all-electric SM3 ZE car, the SM6 sedan and the XM3 and QM6 SUVs.
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The French car manufacturer Renault SA holds 81% of the capital of Renault Samsung.
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The vice president said three things should be guaranteed for the survival of Korean unity: high quality, reasonable production costs and on-time delivery to overseas markets.
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“It takes all-out efforts to stick to these guidelines. We are experiencing unprecedented difficulties that we have never experienced in the past. If the Busan factory does not follow the guidelines, the group will inevitably take a new path (for survival), ”he said.
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