Exodus from Korea
Renault is likely to be following the move of General Motors, which recently announced a shift of production of new models away from Korea.
According to industry sources on December 12, French automaker Renault, the parent company of the local Renault Samsung Motors, appears to relocate the production of 30,000 sports utility vehicles (SUVs) to China from its plant in Busan, Korea.
Renault recently got approval from Beijing authorities to establish a US$1.3 billion manufacturing joint venture in Hubei, China with Dongfeng Motor Group. Of the world’s top 10 carmakers, Renault is the only company that does not have a production presence in China.
Renault’s future plant in China is expected to start in 2016, assembling a follow-up model of the QM5 SUV that has been manufactured in the Busan plant.
Paying a visit to Korea recently, Jérôme Stoll, chief performance officer and sales & marketing director of Renault, hinted at a possible production cutback at the Busan plant by expressing concerns over high labor costs in Korea. He said, “I have no other alternative but to move production to more competitive plants.”
The production in Renault Samsung’s Busan plant has been declining from 275,000 vehicles in 2010 to 244,000 in 2011, and then to 144,000 last year. The production saw just 123,000 cars as of the end of November this year. Samsung Renault workers are concerned that the shift of SUV production to China would further pull down the plant’s production.