Renault Samsung Motors plans to increase capacity at its Busan factory if orders continue at the same rate as last year.
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Chief executive Jean Marie Hurtiger said 2009 was a very strong year for carmakers in Korea. “The big question is how long it will last and, if January proves strong, will we have to raise capacity?”
Hurtiger said capacity could be increased at Busan by adding a third shift. “We need short term solutions and we are seriously considering three shifts. This is new to Korea and needs to be discussed with the employees, but we are seriously considering the option.”
The company has just launched the new SM5 flagship sedan and Hurtiger said that it has already received 10,000 orders for the car. He expects sales to rise above 15,000 before the end of this month.
He added, however that operating profit probably fell in 2009 after the stronger yen increased the cost of Japanese components.
“The operating profit will be negatively impacted by the exchange rate because we import some components like the gearbox and some engines.”
The yen averaged 13.63 against the won in 2009, a 27% gain compared with 2008. Hurtiger said Renault Samsung was taking steps to obtain parts locally.
Profit at the automaker, which hasn’t reported 2009 results, fell 63% to KRW76bn (US$68m) in 2008 after higher material costs eroded earnings.
“Provided the Korean market stays strong and exports recover, we should do at least as well as in 2009 this year,” Hurtiger said.
Renault Samsung’s car sales fell 3.7% to 189,813 vehicles last year. South Korean sales rose 31% to a record 133,630 units, boosted by South Korean government incentives for new car purchases.
The automaker will begin selling the new SM5 flagship sedan in South Korea on 18 January and will start exports to markets including Europe later this year. It may introduce a diesel version for Europe, Hurtiger said.
“If the car is successful in Europe, it’ll be a significant part of our volume.”
The firm already ships the Renault Koleos crossover to Europe.
