Renault Samsung may have to downsize in an effort to overcome its financial difficulties caused by slow sales in Korea.
The carmaker said it had started accepting applications for early retirement from employees as part of its 2012 ‘revival’ plan.
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Those applying are being offered retirement payment in addition to a bonus worth up to two years’ salary depending on years of service. About 4,500 of the company’s 5,500 workers are eligible for the programme which does not apply to 1,000 employees in the R&D and design teams.
The company said it would take retirement applications from now until 7 September. Departing employees can also receive other allowances such as education fees for their children.
This is the first time Renault Samsung has cut personnel on such a scale since it was established in 2000 [with Renault taking a 70% stake; it was previously the a car making unit of Korean chaebol Samsung formed in 1994 but didn’t build cars until 1998 – ed].
It has been struggling with domestic sales and exports and, last year, posted a disastrous operating loss of about KRW21.5bn (US$190m).
Sales in the first half of this year were down 32.8% in 2011 and analysts say that Renault Samsung’s problems lie with an ageing [largely Nissan platform-based] model line-up, the lack of an offering in an increasing diesel market and a slowdown in the Asian economy.
The core of the 2012 Renault Samsung Revival Plan includes ramping up local content, marketing and face-lifting existing models.
Renault Group CEO Carlos Ghosn announced last month a US$160m investment at the Renault Samsung’s plant in Busan to manufacture the US-bound Nissan Rogue SUV starting 2014.
The factory, which has an annual production capacity of 300,000 vehicles, is expected to produce only 180,000 this year.
Meanwhile, GM Korea said it was also offering staff the option of voluntary early retirement. Some 100 senior managers have applied for the programme and they will also receive compensation of up to two years of their earnings, among other allowances.
GM Korea, which has 17,000 employees, sold 469,870 vehicles in the first seven months, 2.1% down on 2011.
The Korean unit is part of GM’s International Operations segment which booked a second quarter operating profit of US$600m, about the same as the previous year.
