Renault Samsung Motors will continue to produce Nissan's sports utility vehicle (SUV) Rogue at least until March next year.
Originally, the automaker was scheduled to put an end to the manufacturing contract with Nissan at the end of this year.
The extension of the contract with Nissan has eased concerns about a “production cliff” or an abrupt drop in output, but it can fuel the ongoing labor-management confrontation over a plan to downsize the workforce.
Renault Samsung agreed with Nissan to extend production of the Rogue SUV until the first half of next year, automotive industry sources said on Aug. 27.
The Nissan Rogue is a symbolic model that put Renault Samsung’s Busan plant on track. Last year, Renault Samsung sold 227,577 units, with the Rogue accounting for 47 percent of the total output and 78 percent of its exports.
Under the new contract with Nissan, Renault Samsung will produce a total of 74,000 units of the Rogue by March next year. The figure represents an increase of 14,000 units from the 60,000 units under the existing contract.
Some observers say that Nissan may extend its contract with Renault Samsung even beyond next March. "Recently, Nissan requested Renault Samsung to produce 4,000 units per month by the end of the first half of next year," a source familiar with Renault Samsung said.
A big problem is the union’s opposition to the company’s push for an early retirement program. The management notified the union that it would push for its workforce downsizing plan despite the extended contract with Nissan. “The contract period was from April this year to March next year, but the management lied during the collective wage negotiations, saying that the contract would expire in December,” a labor union official said, warning that the union would play hardball during the wage negotiations in September.
On the other hand, the management said that despite the extension of Rogue production, workforce reduction is inevitable as the annual production volume of the Nissan model has dropped to 70,000 units from 100,000.