Renault Group pressures Renault Samsung Motors to magnify productivity or the business will not survive

Renault Group called on its South Korean division Renault Samsung Motors to boost its productivity and competitiveness because the business may not survive. The call was made since the negotiation between the union and management in South Korea over wage issues was not yet settled.

Apparently, as the problem continues, the productivity of Renault in S. Korea has been affected. It is stalling works, so a senior Renault Group executive asked its Korean division to look for ways to better the company’s productivity.

Renault warns that inaction may lead to business failure

Renault stepped in after observing that Renault Samsung Motors was not able to follow through with its survival plan that was discussed late last year. There was a meeting about the steps to take to help the company make more significant profits again after it incurred losses due to the COVID-19 pandemic, The Korea Times reported.

The sales were declining, and production has been slow as well. The business was bad, and it was made worst by the fact that Renault Samsung Motor workers' union went on strike due to wage complaints.

To ease the problems and make the company continue to roll, the South Korean branch of the French automobile maker vowed to improve productivity in its main factory in Busan. This is S. Korea’s second-largest city, and with the plan, the company is hoping to get more orders from markets in Europe for its XM3 SUV models.

Why Renault Korea was reprimanded

With its promise, Renault Group let the Busan plant manufacture a large number of the said vehicle model for overseas shipping. However, Renault Samsung Motors was sluggish and failed to accomplish its plan. This is why the French company officials have called on its Korean affiliate to improve its work.

"When I visited the Busan plant in 2020, officials there promised to boost the plant’s competitiveness to secure production of the New Arkana (XM3) for exports to Europe," Business Korea quoted Renault Group's executive vice president, Jose Vicente de Los Mozos as saying. “I persuaded Renault Group's top management to outsource production of the New Arkana to Busan Plant. But the promise was not kept.”

Mozos reiterated that Renault Samsung was not able to stick to its goal, so the Busan plant lags far behind compared to other Renault factories. He said that the Korean officials of the company must tackle this problem immediately because if the business fails, the South Korean branch may face closure.