Renault Samsung Motors Launches 'Survival Plan'... Voluntary Retirement Offered to All Employees for the First Time in 8 Years

Excluding Employees Hired After March 2019... Consolation Payments and Benefits Worth 180 Million to 200 Million KRW for All Other Employees

[Asia Economy Reporter Yu Je-hoon] Renault Samsung Motors is activating a 'Survival Plan' that includes an emergency plan such as offering voluntary retirement to all employees.

Renault Samsung Motors announced on the 21st that it will accept voluntary retirement applications from all regular employees until the 26th of next month. This is the first time in eight years since 2012 that Renault Samsung Motors is offering voluntary retirement to all employees, excluding those hired after March 2019.

Applicants for voluntary retirement will receive special severance pay based on years of service, tuition support for children (10 million KRW per child), and vehicle discount benefits. The company estimates that the average amount per person will be around 180 million to 200 million KRW.

This Survival Plan and the resulting restructuring are due to the worsening management difficulties faced by Renault Samsung Motors. In fact, Renault Samsung Motors sold a total of 116,166 vehicles last year, marking the lowest figure in 16 years since 2004. Accordingly, operating profit is also expected to turn into a loss. In particular, last year's export performance was only 20,227 units, a 77.7% decrease compared to the previous year, as Nissan Rogue production, which accounted for 72% of the total export volume from the Busan plant, ended in March.

A Renault Samsung Motors official stated, "Without improvements in profitability and export competitiveness, it is difficult to expect future new car project orders from the Renault Group," adding, "It is necessary to respond swiftly to internal and external management environments by improving organizational structure, reducing fixed and variable costs, and operating flexibly."

Accordingly, Renault Samsung Motors plans to strengthen profitability in the domestic market, secure cost competitiveness and supply for XM3 export vehicles, reduce the total number of executives by 40% through this Survival Plan, cut the remaining executives' salaries by 20%, and conduct voluntary retirement for all employees.

This Survival Plan is interpreted as a response to the profitability enhancement strategy 'Renaulution' announced earlier by the Renault Group. In the Renaulution strategy, the Renault Group identified Korea, along with Latin America and India, as regions where profitability needs to be strengthened compared to the current situation.