Renault Samsung Motors reduces production

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Renault Samsung Motors reduces production

Renault Samsung Motors is cutting production at its sole manufacturing plant starting next month due to lower demand for its vehicles.

The Korean unit of Boulogne-Billancourt, France-based Renault Group will slow the pace of production in Busan from the current 60 units per hour to 40 per hour starting Oct. 7, a spokesperson for the automaker said Monday.

The latest measure comes as Renault Samsung Motors has been looking for ways to cut costs in response to continuing business losses. From January to August this year, Renault Samsung Motors sold 114,705 vehicles, down 39 percent from 157,313 units sold during the same period a year earlier.

Renault Samsung Motors has been making fewer cars this year as Nissan reduced Rogue SUV orders from 100,000 units to 60,000 in March citing concerns over quality and delivery stability. The contract terminates in October, and there has been no news over whether it will be extended.

Ahead of the planned output cut, Renault Samsung Motors offered a voluntary retirement program to its 1,800 employees.

It was the first time in 7 years that the automaker resorted to a human resource overhaul to adjust to continuing business losses.

Employees under the “new start program” will receive a maximum of about 36 months of compensation for accepting the buyout and some tuition support for their children, with some departing by Oct. 31 and the others by the end of the year.

Although the company expected to reduce head count by about 400 through the process, the spokesperson said only a few dozen employees applied for the program.

As the company failed to meet its head count reduction target, additional downsizing efforts are inevitable for Renault Samsung Motors to keep its head above water. The Renault Samsung Motors union plans to strike if management decides to fire workers to meet its goal.

“We are currently discussing with the union future moves,” the spokesperson said. “Nothing is set at this moment, and we are trying to find the best solution for both parties.”

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