Renault Samsung President Appeals for Restructuring "Cash Rapidly Depleting" (Comprehensive)

Dominic Signora, President of Renault Samsung

[Asia Economy Reporters Changhwan Lee and Jehun Yoo] The CEO of Renault Samsung Motors, which is struggling due to worsening management, sent a letter to employees appealing the company's situation and the urgency of restructuring.

According to the automotive industry on the 16th, Dominic Signora, CEO of Renault Samsung, sent a letter to employees last week stating that the company recorded a loss for the first time in eight years since 2012 due to last year's performance, and has started a survival plan, which includes accepting voluntary retirement applications from all employees.

CEO Dominic explained the background of the voluntary retirement by saying, "Last year, the total sales volume combining domestic market sales and exports, as well as production volume at the Busan plant, recorded the lowest level in 16 years since 2004. Moreover, export performance dropped by nearly 80% compared to the previous year as Nissan Rogue production ended in March last year."

He added that the depletion of the company's cash reserves is an even bigger problem. He emphasized, "Despite poor performance, fixed costs including labor costs did not change, which inevitably increased the company's losses, resulting in the depletion of 200 billion KRW in cash reserves last year."

He continued, "Even last month, due to sluggish sales, about 100 billion KRW more cash was reduced, increasing the urgency for drastic cost reduction."

Ultimately, the survival plan is an unavoidable situation, and restructuring is being carried out to quickly improve performance. Key points of the survival plan include not only restructuring but also enhancing the value of Renault Samsung products in the domestic market and securing the highest competitiveness of the XM3 European export model.

CEO Dominic said, "Our unfortunate reality is that we cannot overcome this crisis without enduring excruciating pain. From now on, we will take proactive steps to reach the break-even point as quickly as possible and escape the current situation where cash is rapidly being consumed."

Meanwhile, discussions on the 2020 wage and collective bargaining between Renault Samsung labor and management are still going in circles. Originally, both sides planned to resume the 6th main negotiation after the Lunar New Year holiday, but they have not been able to set a specific schedule due to unresolved differences. The union is demanding CEO meetings and the establishment of an Employment Stability Committee along with negotiations.

A union official said, "Since the executive branch took office, there has been no meeting with the CEO, but the management wants to replace this with the Employment Stability Committee. We will observe whether the management accepts this and decide on future response policies."

Renault Samsung labor and management have not reached an agreement on wage increases (70,000 KRW) and voluntary retirement, which is a core part of the survival plan. Accordingly, the Renault Samsung union obtained legal rights through a strike vote on the 1st and 2nd but is cautious about actually starting a strike.

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