Renault Samsung to Extend Production Until March Next Year

Renault Samsung Motors decided to increase the production of Nissan’s sports utility car (SUV) logs by about 14,000 units, which is expected to end consignment production at the end of this year. Nissan Log is a model that accounts for about half of the annual Renault Samsung plant. The prolonged production quenched the urgent fire in the production cliff crisis, but there is concern that the labor-management confrontation will occur again over the restructuring plan of 400 people.

According to the automotive industry on November 27, Renault Samsung Motors will increase the production of export-only SUV logs at Nissan and Busan plants by the first half of next year. An official from Renault Samsung said, “The contract volume this year is the volume for 2019, and the annual contract period with Nissan, Japan, which is the fiscal year of March, is also theoretically March next year.” said. Nissan’s log was originally scheduled to cease production in September, but has been extended to December this year.

Nissan Rog is a symbolic model that puts the Busan plant on the trajectory on track. According to the strategy of the headquarters Renault Nissan Alliance, it has been produced at the Busan plant since August 2014, and if US exports were strong, Renault Samsung Motors could turn to the black. Based on the surplus, Renault Samsung settled in the domestic market with its mid-size sedan SM6 and mid-size SUV QM6. Last year, Renault Samsung sold 22,577 cars, 47% of which were 10,245, of which Nissan Log was the export volume. Of the total exports (12,202 units), 78% are logarithmic. As a result, Nissan Rogue, which had been a filial piety worker, was expected to drop production at the end of September’s production contract. In particular, it was a crisis earlier this year, when hard struggles such as strikes for over a year continued. When the strike failed to meet the deadline of thousands of log exports, Nissan headquarters canceled 18,000 orders and moved 24,000 to the Kyushu plant in Japan. As a result, Nissan Log’s Busan plant production, which is expected to have about 100,000 units annually, has dropped sharply to less than 60,000 units. Renault Samsung overcame the crisis by extending the contract termination period from September to December and again next March. The fiscal year of Japanese company Nissan was in March. First of all, Renault Samsung’s total production capacity by March next year was 14,000, adding 64,000 units to the existing contracts.

Some observers are cautious that Nissan could assign log exports to Renault Samsung’s Busan plant even after March. The aftermath of the trade war between the US and China is dragging down the economy in major markets such as the US and Europe. The won depreciated against the dollar, surpassing the 1,200 won mark, while the yen, which is a safe asset, was strong, and the yen, which was over 110 yen against the dollar, rose to 100 yen. If the productivity is similar, Korea’s advantage in terms of profits is that Korea’s ability to export to the US at a lower price due to the weak won and without a tariff to the United States under the FTA. An official familiar with Renault Samsung explained, “Recently, there was a request for Nissan, Japan to produce 4,000 units per month by the first half of next year.”

The problem is union opposition. The company notified the union that it would push for restructuring such as hopeful retirement in order to extend production of Nissan Log. A union official said, “The contract with Nissan of Japan was from April this year to March next year, but the management (December 60,000 units) lied at the time of the negotiations.” In September wage negotiations foreshadowed a tough struggle. On the other hand, the company said that despite the prolonged production and additional volume, the company’s restructuring is inevitable. An official from Renault Samsung said, “The company did not have manpower adjustments even though production declined.”