by Groupe Renault - Corporate

An ambitious plan to help the recovery of Renault Samsung Motors

After several encouraging years, Renault Samsung Motors has seen a significant slowdown in sales in South Korea (down 27% between 2010 and 2011) owing to fierce competition from Hyundai and Kia. 2012 is set to be equally difficult. Renault is addressing the situation by launching an action plan aimed at restoring the brand’s competitiveness.

Background

By acquiring a majority stake in Samsung Motors in 2001 (which now stands at 80.1%), Renault established significant presence in the South Korean market and a key industrial hub in Asia with the Busan plant. The Renault Samsung Motors range today includes three sedans, the SM3, SM5 and SM7, covering the C, D and E segments, along with an SUV, the QM5. Renault Samsung Motors sold 118,135 vehicles in South Korea in 2011 for a 7% share of the market. This figure does not include a large share of vehicles produced at Busan for export under the Renault and Nissan brands. To give juts two examples, the QM5 goes under the name of Renault Koleos outside South Korea, while the SM7 is sold as Renault Talisman in China.

One of Renault Samsung Motors’ biggest strengths is its excellence in product and service quality. The brand has ranked number one for 10 years in the Marketing Insight survey, a benchmark study in South Korea. Its status as a premium brand is firmly recognized by consumers.

Getting back on the growth track

Renault Samsung Motors has already announced the launch of two new models in 2013, a compact crossover and a full-electric sedan, the SM3 Z.E. In addition, the current range will continue to be produced in limited-edition models and upgraded to stay in tune with the times. The brand is aiming to take its market share back up to 10%.

Boosting activity at Busan is also vital. The plant was designed to produce 300,000 vehicles a year but will produce just 180,000 in 2012 (for South Korea and 60 other countries). Hence the announcement that some USD 160 million is to be invested in the site so that it can manufacture up to 80,000 units a year of the successful crossover Nissan Rogue, with production to start in 2014. Renault Samsung Motors also intends to work more with South Korean suppliers with a view to sourcing as many locally-produced parts as possible.

The increase in production in South Korea reflects the Alliance’s commitment to helping Renault Samsung Motors meet its objectives on competitiveness and growth,  said Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, in July. For François Provost, CEO of Renault Samsung Motors, Renault Samsung Motors’ biggest strength is its employees. I think that our ongoing efforts to increase local sourcing and increase profitability will help us to get over the current difficulties.

Also, to remind consumers of the Renault Samsung Motors experience, an advertising film was launched recently highlighting the current range. So do as the brand’s slogan says and “Discover the difference”!

Tags: brand business