Preparing for Discontinued Production of Nissan Rogue
Renault Samsung Motors will launch a compact sports utility vehicle (SUV) in the Korean market next year. The carmaker plans to fill the vacuum to be created by the discontination of the Nissan Rogue production from this September by boosting sales of the new SUV.
Renault Samsung Motors planned to launch the new model in the Korean market in the first half of 2020, said sources in the automobile industry on March 21. The SUV is the first new car that Renault Samsung Motors launches domestically since it rolled out the mid-sized sedans SM6 and SUV QM6 in 2016. The new model will sit between Hyundai Motor's Kona and Tucson in the Korean market in terms of size.
Renault Samsung Motors is faced with an acute crisis. Its production of the Nissan Rogue will stop this September. Last year, Renault Samsung Motors exported 107,245 units of the Nissan Rogue. The volume was close to half of its total sales (227,577 units) in 2018. For this reason Renault Samsung Motors has been negotiating with Renault's global headquarters on how to fill the void. However, the carmaker virtually failed secure a new model that will replace the Nissan Rogue because of a partial strike by the labor union demanding a pay raise.
Following Renault Group's reorganization of its regional headquarters, Renault Samsung Motors also was moved from the Asia and the Pacific Headquarters to the Africa, Middle East, India and Pacific Headquarters. Accordingly, its major export markets have changed, as well.
With a view to remedying this issue, Renault Samsung Motors has decided to launch new models. The automaker intends to fill the void of about 100,000 units caused by the suspension of the Nissan Rogue production by promoting its sales with new models. Renault Samsung Motors aims to sell 30,000 units of the new models a year. This means that the new models will sell as many as the Tucson of Hyundai Motor or the Tivoli of SsangYong Motor. The Tucson and the Tivoli sell 2,000 to 3,000 units per month, respectively, in the domestic market. The QM6 has already earned Renault Samsung Motors strong positive recognitions among consumers in the Korean SUV market. If the new models show strong sales in the Korean market, Renault Samsung Motors will be able to negotiate with its global headquarters about exporting them abroad.
In fact, Renault Samsung Motors sold 28,344 units of the QM6 in Europe, the Middle East, Africa, and Central and South America in addition to the Nissan Rogue exported to North America last year. The automaker also sold 1,559 units of the SM6 in the Middle East market.
The Middle East market belongs to the Africa, Middle East, India and Pacific headquarters to which Renault Samsung Motors will move according to the reorganization plan. The new SUV to be launched this time is highly likely to target the Middle East market.
"It is more advantageous for Renault to export cars to the African market from Europe or produce them at a factory in Morocco. As the India market demand low-priced cars, local production is advantageous in the Indian market," said Lee Hang-ku, a senior research fellow at the Korea Institute for Industrial Economics and Trade. "Renault’s reorganization suggests that Renault Samsung Motors will produce vehicles to export them to the Middle East."
In particular, some automobile industry experts say that beginning in 2020, new cars will be rolled out with the diamond-shaped "Losange" emblem of French Renault instead of the current emblem of Renault Samsung Motors from Renault Samsung Motors factories in Korea. Renault Samsung Motors pays Samsung Card 0.8 percent of its sales as loyalties for using the Samsung brand. The contract will expire in 2020 when the new models come out. This is why they say that the new cars will be rolled out with the emblem of French Renault with no extension of the contract on Samsung brand use beginning in 2020 as the loyalties exceed 40 billion won a year.