Renault's South Korean Samsung Unit to Cut Jobs as it Tries to Tackle Falling Sales

It’s not only Europe that has Renault worried as the French automotive group is now having troubles in South Korea with its Samsung unit. 

Renault Samsung said on Friday that it would launch its first ever voluntary redundancy programme in order to deal with falling sales both in its home market and abroad. 

According to Reuters, while the automaker did not reveal how many jobs it wants to cut, a local media report made word of "hundreds" of positions. 

Renault Samsung said that 4,500 employees are eligible for the programme, while the company excluded about 1,000 design and research positions. 

"Conditions remain difficult, so we came up with revival measures including voluntary retirements to slash costs," a Renault Samsung spokeswoman told Reuters. 

From the beginning of the year through July, the South Korean automaker saw its overall sales drop 34 percent over the same period last year. 

Last month, Renault-Nissan Group CEO Carlos Ghosn revealed plans to invest US$160 million (€130 million) in Samsung to add 80,000 units of the next generation Nissan Rogue to its plant in Busan, Korea. These vehicles will be shipped to North America and select Asian countries.  

 

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France Wants the European Union to Monitor South Korean Car Exports

The spike in South Korean car sales in Europe the past few years has the French worried as at the same time they are seeing their numbers drop amidst the debt crisis that has engulfed the continent. 

Just last year, sales of Korean cars in the European Union grew 24 percent, even though the overall market contracted. French carmakers, on the other hand, saw their sales drop with PSA Peugeot Citroen announcing plans to slash 8,000 jobs. 

As a result, France has officially sent a request to the EU Commission to monitor South Korean car exports, a move seen by many analysts as the first step to a possible re-introduction of tariffs only a year after a free-trade deal with the Asian country came into effect. 

"The European Commission confirms it has received a note from the French authorities requesting ... prior surveillance measures for South Korean car imports," EU Trade Spokesman John Clancy said in a statement. "The Commission is reviewing carefully the request." 

If the EU accepts France's request, local carmakers will be able to obtain detailed information including the type and number of products scheduled for export to Europe before the cars arrive from South Korea.

In the event that the EU Commission takes one more step and scraps the free-trade agreement with Seoul, then Europe will be able to impose protectionist restrictions to South Korean exports. 

However, as pointed out by Reuters that broke the story, despite the fact that South Korean exports to the EU grew by 40 percent to 345,000 units since the deal was signed on July 1, 2011, that number is well below the 640,000 units imported in 2007. 

The reason for this discrepancy is that South Korean carmakers like Hyundai and Kia have increased their production capacity in European factories in the Czech Republic and Turkey. 

"The growth of Hyundai in Europe is based on products designed, engineered and built in Europe," Andreas Brozat, a spokesman for Hyundai told Reuters. "Less than 12 percent of the 232,454 Hyundai cars registered in Europe during the first half of 2012 were built in Korea, while 70 percent came from the European region." 

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