Renault Samsung Seeks to Escape Slump... 'Rebound' Signal with Strong XM3 Export Performance

XM3 European Export Booming... Risk of Labor-Management Conflict Also Seeking Common Ground

[Asia Economy Reporter Yu Je-hoon] Renault Samsung Motors, which had long been stuck in a slump, is seeking a turnaround. The momentum from the European exports of its main model, the compact sport utility vehicle (SUV) XM3, serves as a stepping stone. With signs of resolution emerging in the labor-management conflict that has persisted since last year, attention is focused on whether the company can settle on a path to normalization.

According to the industry on the 3rd, Renault Samsung sold 8,846 units in August, a 16.9% increase compared to the same month last year. Last month, Hyundai Motor Company, Korea GM, and Ssangyong Motor all saw declines, and Kia’s sales growth rate was only 0.1%, essentially flat, making Renault Samsung the only company to successfully rebound.

Renault Samsung fell into a slump after the end of consignment production of the Nissan Rogue led to a shortage of work. Last year, it recorded a deficit of 79.7 billion KRW for the first time in eight years, and this year, continued sluggish sales in the domestic market led to a reduction in the annual production target from 157,000 units to around 100,000 units.

As the business environment worsened, Renault Samsung launched a ‘survival plan’ and began restructuring early this year, but failed to find a turning point due to opposition from the labor union. The labor-management parties at Renault Samsung, which had not even concluded wage and collective bargaining negotiations last year, clashed with strikes and workplace lockouts in May, causing considerable disruption to production.

Renault Samsung’s escape from the slump came as exports of its main model, the ‘New Arkana’ (the European export name for the XM3), gained momentum. The New Arkana, which began sales in 28 European countries starting in June, has received favorable reviews locally and has become a cash cow for Renault Samsung. The cumulative XM3 export volume from January to August this year was 28,712 units, exceeding last year’s total export volume of 20,227 units. Although domestic sales volume decreased by 24.6% year-on-year last month, the strong performance of the XM3 offset this with a 189.4% increase in exports.

The possibility of allocation for the next new car is also increasing. Renault Group, which has a strategic partnership with Renault Samsung, and China’s Geely Automobile plan to jointly develop eco-friendly new cars through Renault Samsung and Geely-Volvo’s sub-brand Lync&Co, targeting the Asian region with Korea and China as bases. If allocated new car volumes accordingly, Renault Samsung will secure future revenue sources beyond the XM3.

The industry is paying close attention to the results of the labor union’s vote on the tentative agreement for the 2020 and 2021 wage and collective bargaining negotiations currently underway. Whether the process proceeds smoothly could affect the stabilization of XM3 production and future new car allocations. An industry official said, “Since the XM3 is receiving favorable reviews in the European market, stabilizing production through labor-management harmony is an urgent task,” adding, “If Renault Samsung gains recognition for production stability and quality through the XM3, it will be in a favorable position for future new car allocations.”

Meanwhile, Renault Samsung is also making efforts to regain the domestic market. On the same day, Renault Samsung launched a facelifted model of the mid-size SUV QM6. The model features the application of popular options as standard and adds features such as Adaptive Cruise Control (ACC) to the popular LPG model QM6 LPe, enhancing overall product competitiveness. Since its launch in 2016, the QM6 is Renault Samsung’s mainstay domestic model, on the verge of surpassing 200,000 units sold in five years.

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