[Car Talk Forest] Survival of 'Reu·Ssang·Shwe' Losing 3rd and 4th Place in Domestic Car Sales

Although Each Situation Is Different, 'Consultation' Based on Understanding Is Necessary

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Domestic mid-sized car manufacturers Renault Samsung, SsangYong Motor, and Korea GM, collectively known as 'ReuSsangShwe,' are struggling to escape the slump. Once their market share soared to 25%, ReuSsangShwe's share now barely holds at around 10%. They appear to be in urgent need just to 'survive' in the market.

Last year, the COVID-19 pandemic caused production and sales declines for automakers, making it a difficult period, but this year’s situation is even more painful for ReuSsangShwe as conditions have improved elsewhere. Korea GM and Renault Samsung’s domestic sales last month increased by only 2.4% and 6.2% year-on-year, recording 5,089 and 3,900 units respectively. SsangYong, which sold 5,648 units in January this year, saw its domestic sales plunge to 2,673 units in February due to mostly shutting down operations.

In contrast, Hyundai and Kia have seen domestic sales increase by 20-30% this year. Moreover, imported car brands broke records last year by selling a historic high of 274,859 units despite COVID-19, and in January and February this year, they increased sales by approximately 26% and 33.3% year-on-year, setting new milestones.

While ReuSsangShwe’s slump continues, imported car brands Mercedes-Benz and BMW sold 5,707 and 5,660 units last month, ranking third and fourth in domestic sales following January. Due to advancements in autonomous driving technology, the price range of domestic cars has risen to levels similar to imported cars, breaking the stereotype that 'imported cars are expensive' and expanding buyers’ choices. Furthermore, as the automotive industry shifts from internal combustion engine vehicles to eco-friendly vehicles, primarily electric cars, ReuSsangShwe’s appeal is gradually diminishing according to industry consensus. Hyundai, Kia, and imported car companies have rapidly declared the phase-out of internal combustion engines and are producing and launching electric vehicles in the domestic market, but these three companies do not manufacture electric vehicles domestically.

Industry insiders agree that at this turning point in the ecosystem, 'consultation' based on mutual understanding is most necessary for ReuSsangShwe to survive. SsangYong plans to revive itself by introducing its first electric vehicle, the E100, this year, but liquidity crises may prevent this from blossoming. SsangYong, which is preparing a P-Plan (Preliminary Rehabilitation Plan), needs support from its main creditor, the Korea Development Bank. There are calls for SsangYong to establish a realistic rehabilitation plan and for the bank to assess the automotive industry ecosystem and shareholder value to negotiate in a way that benefits both parties.

For foreign-owned Renault Samsung and Korea GM, securing competitiveness through investment from their headquarters requires urgent labor-management consultations. Since electric vehicles have fewer parts and simpler production methods than internal combustion engine vehicles, workforce restructuring is essential. However, frequent labor disputes in Korea make it highly likely that such restructuring will not be allocated smoothly. Renault Samsung is experiencing renewed labor-management conflicts due to reduced production with single-shift operations and rotating leaves, but there are calls for both sides to show concessions. Similarly, Korea GM, which has frequently faced labor-management confrontations involving lawsuits over restructuring and dispatched labor, needs to develop a harmonious labor-management relationship to ensure future survival.

This content was produced with the assistance of AI translation services.