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Renault Samsung Suffering from Sluggish Sales, Prolonged Labor Strikes
Domestic Sales, Exports Backpedaling
Renault Samsung Suffering from Sluggish Sales, Prolonged Labor Strikes
  • By Jung Min-hee
  • October 11, 2018, 15:09
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Renault Samsung's factory in Busan.

Renault Samsung Motors is suffering from a double whammy of sluggish sales and labor strikes this year. Both domestic sales and exports are backpedaling, deepening its financial difficulties.

Renault Samsung sold a total of 101,683 units in the first eight months of this year, down 8.3 percent from the 110,849 units sold in the same period last year.

Domestic sales were down 18 percent, with sales of all models except the SM5 and QM6 decreasing.

Exports also recorded a poor performance, with the SM6 and SM3 posting a 78% and 86.4% plunge, respectively.

Even the small hatchback "Clio," which was released by Renault Group in April this year amid high expectations, is showing mixed responses from consumers.

Renault Samsung set a monthly sales target of 1,000 units for the Clio, but it sold only 2,067 units from April to August.

Due to the slump in domestic demand, Renault Samsung has been lagging behind Ssangyong Motor in the domestic market for the past four months.

Meanwhile, the labor union of Renault Samsung has begun its second partial strike on Oct. 10, amplifying the company’s trouble.

Renault Samsung's labor union staged a four-hour partial strike on the day, with the production workers going on strike from 11:45 a.m. to 15:45 p.m. and the clerical workers from 13:00 to 17:00.

In addition, a two-hour partial strike by day-shift workers was scheduled on Oct. 11 and 15. The union plans to maintain the rejection of overtime work, which started on Oct. 2.

The labor union began its first partial strike on Oct. 4. Wage and collective bargaining talks broke down in the sixth round of negotiations on September 14 and the union held a strike vote on September 20, with 85.1 percent of the members voting in favor of a strike.

"Although we achieved impressive milestones in 2017, including the best ever performance in sales, accumulated sales of 3 million units, and an operating profit of 401.6 billion won, the company has not been paying any compensation to our union members." said a union representative. “The company has been demanding sacrifice on the part of union members, citing the need to reduce labor costs to enhance competitiveness.”.

The company’s management sees a wide gap between the company situation and the union`s demands. Because Renault Samsung is competing individually with more than 40 factories in Renault Group, it is important to secure competitiveness in terms of labor costs and production costs, a company executive said.

Industry analysts say the company's sluggish performance and labor conflicts have put Dominique Signora, who was appointed as CEO of the automaker in November last year, to the test.

Renault Samsung CEO Dominique Signora has been put to the test as the company is suffering from a double whammy of sluggish sales and labor strikes.