Renault Samsung Decides to Reduce Number of Executives and Salaries to Overcome Crisis

[Asia Economy Reporter Kiho Sung] Renault Samsung Motors has decided to significantly reduce the number of executives and cut their salaries in order to overcome challenges such as the novel coronavirus disease (COVID-19) and a decrease in export volumes.

According to the automotive industry on the 7th, Renault Samsung Motors plans to reduce the total number of executives by about 40% and cut executive salaries by 20% starting this month. This decision was reportedly made following internal discussions among executives aimed at improving management efficiency.

Renault Samsung Motors' sales last year amounted to 116,166 units, a 34.5% decrease compared to the previous year. In particular, exports plummeted by 77.7% due to the disappearance of Nissan Rogue volumes, which were being produced on consignment. The Rogue accounted for up to 100,000 units annually, representing 30% of the production at the Busan plant.

Renault Samsung Motors was the only one among the five domestic automakers to enter the new year with the uncertainty of a strike. Especially, the 2020 wage and collective bargaining agreement negotiations, which had been deadlocked since September last year and resumed on the 7th, pose the greatest risk to Renault Samsung Motors, which recently began exporting the XM3 (export name New Arkana). If the union goes on strike causing production disruptions, the company could suffer irreparable damage.

Renault Samsung Motors has decided to operate only the day shift until the second week of January and eliminate night shifts. The Busan plant operated in November and December last year, with shutdowns on December 11, 23, 24, and 31. Work schedules for the third and fourth weeks of January will be decided at a production meeting scheduled for the 14th.

Reduced working hours leading to a shortage of volume is a significant burden for Renault Samsung Motors. Unlike other automakers, production workers at Renault Samsung Motors are on a monthly salary system, so even if production decreases due to reduced workload, their pay does not significantly drop. This creates a vicious cycle where production decreases due to reduced exports, but labor costs remain the same. Ultimately, the export performance of the XM3 is expected to be key to Renault Samsung Motors' recovery.

This content was produced with the assistance of AI translation services.