Foreign Parent Companies in Trouble Themselves
India's Mahindra Group is planning to withdraw its investment from SsangYong Motor Co. and both GM Korea and Renault Samsung Motors are becoming increasingly anxious as GM and Renault are taking a direct hit from the spread of COVID-19 in the United States and Europe.
Besides, GM Korea and Renault Samsung Motors have yet to finalize their wage negotiations for 2019. If their headquarters’ financial conditions continue to deteriorate with their exports to the United States and Europe already halted, the South Korean companies may be excluded from the headquarters’ support given that their profitability has dropped due to labor-management disputes.
GM and Renault are going through the worst situation. For example, the automobile sales in the United States dropped 33 percent year on year last month and those in France, Italy, Spain and Germany plunged 82 percent, 85 percent, 69 percent and 38 percent, respectively. GM Korea, which is heavily dependent on exports, is taking a direct hit as well.
Renault Samsung Motors stopped producing the Nissan Rogue for export to North America and replaced it with the XM3 for export to Europe on March 31. However, its monthly export volume is forecast to drop from more than 3,000 units to approximately 1,500 units due to the shutdown of the automobile industry in Europe.