Renault Samsung to reduce South Korean workforce by 15%

Article by Anita Panait, on September 11, 2012

The South Korean unit of French carmaker Renault SA is planning to remove around 15 percent of its total employees under a "voluntary retirement program" as part of its effort to reduce costs. Renault Samsung is under pressure to cut costs after posting a 40.4 percent drop in overall sales for the first eight months of 2012.

Sales at Renault Samsung were sluggish both in its home market and in overseas regions. Renault’s South Korean unit posted a 52 percent drop in domestic sales and a 32 percent dive in overseas shipments.

The carmaker’s dismal sales performance is blamed on slowing global economy and a limited product line-up. According to Renault Samsung, around 800 of its 5,500 workers will depart the carmaker under the voluntary retirement program.

South Korean companies usually prefer to employ a voluntary retirement scheme to reduce personnel costs, as the public generally abhor layoffs.

Renault builds vehicles for domestic and overseas sales at its Busan, South Korea plant, which could produce up to 300,000 vehicles annually. The plant produces for-export vehicles like Nissan's Sunny and Almera and Renault's Fluence and Latitude.

The carmaker, however, denied press reports on further job cuts as well as on the possible transfer of Renault Samsung to Nissan, saying that that a local media report on the matter was "groundless."

According to the report, Renault-Nissan chief executive Carlos Ghosn gave orders to the alliance to commence working on the transfer in 2014, when Nissan plans to build Rogue vehicles at the Busan site. Renault owns 80 percent of Renault Samsung.

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