[Car Talk Forest] The Trailblazer, XM3, and Rexton Run Again

Foreign-affiliated Three Companies Overcoming Adversity... Will Normalization of Main Models Become a Ladder for Performance Improvement?

[Asia Economy Reporter Yu Je-hoon] Three foreign-affiliated automakers?Korea GM, Renault Samsung Motors, and SsangYong Motor?plagued by chronic crises, are restarting their engines by normalizing production of their main models. The Trailblazer (Korea GM), XM3 (Renault Samsung), and The New Rexton Sports & Khan (SsangYong Motor) are the key players, models that will determine each company's future. Especially for Korea GM and Renault Samsung, which have relatively high export dependency, the absence of these two models would not only cause significant production declines but also make future prospects uncertain.

The problem is that production of these models has faced setbacks since the beginning of the year. The Trailblazer was hampered by the shortage of automotive semiconductors. General Motors (GM) decided to cut production due to the semiconductor supply shortage, lowering the operating rate of the Bupyeong Plant 1, which produces the Trailblazer, to 50% over the past month. Considering the daily production capacity (60 units), the industry estimates that about 10,000 units of production disruption occurred.

The XM3 experienced difficulties as Renault Samsung's labor and management failed to conclude wage and collective bargaining negotiations last year, leading to strikes and partial workplace shutdowns as strong countermeasures. The resulting production loss reached 5,000 units as of the end of last month, amounting to 250 billion KRW in sales. The Rexton Sports, also a model released by SsangYong Motor amid difficulties, faced critical moments when parts suppliers once refused deliveries. The semiconductor shortage further exacerbated production disruptions.

Fortunately, recently the adverse factors have been gradually clearing. GM has normalized operations at Bupyeong Plant 1 and Changwon Plant as the semiconductor shortage has eased. Although labor and management at Renault Samsung remain in conflict, they have dropped the strike and partial workplace shutdown cards, minimizing production disruptions. SsangYong Motor also normalized production while undergoing corporate rehabilitation procedures.

Meanwhile, the three models released by each company since last year have been achieving decent results, raising market expectations. Korea GM's Trailblazer and its sibling model, the Buick Encore GX, ranked 2nd and 5th respectively in the U.S. small sport utility vehicle (SUV) market in the first quarter. Including the Trax and its sibling model, the Buick Encore, Korea GM's share of the U.S. small SUV market exceeds 30%.

The XM3, which will be officially sold in the European market starting this month, also received good marks in preliminary tests. In March, in four countries?France, Germany, Italy, and Spain?the sales volume over about two months since the pre-launch exceeded the initial target (7,250 units), reaching approximately 9,000 units. If this situation continues until the end of the year, the annual sales volume in the European market is estimated to reach 50,000 to 60,000 units. SsangYong Motor's Rexton Sports also saw sales increase by more than 50% in May despite the adversity of corporate rehabilitation procedures. It is reported that about 4,000 units of remaining undelivered vehicles exist.