Renault Shows Faith in Korean Subsidiary With New CUV

Renault Samsung next year will begin selling in Korea a new cross/utility vehicle based on the Captur concept CUV that debuted in February at the Geneva auto show and had its Asian unveiling in May at the Busan auto show.

Renault Chief Operating Officer Carlos Tavares makes the announcement after denying Korean news reports saying the French parent is looking for a buyer for RSM because the subsidiary’s sales performance has nosedived and seems to be getting worse.

Tavares says Renault is content with its Korean company and has no plan to sell it. "Renault Samsung continues to play an import role within the Renault Group, exporting more than 100,000 vehicles annually.”

Visiting Seoul to review the status of RSM’s turnaround plan and to inspect the auto maker’s research-and-development center, Tavares notes Renault has invested some 1.7 trillion won ($1.47 billion) in its Korean operations during the past decade.

The executive says RSM also is an important export base for Renault and will help attain its goal of selling 50% of its vehicles outside of Europe, compared with 42% currently. RSM exports vehicles to 90 countries under the Renault badge but sells them in Chile under its own Renault Samsung nameplate.

Tavares expresses confidence that RSM soon will win a 10% share of the Korean home market, up from the current 8.9%. It currently ranks fourth in sales behind Hyundai, Kia and General Motors Korea, but ahead of Mahindra & Mahindra subsidiary Ssangyong.

RSM’s current sales slump should be offset in second-half 2012, when new versions of the SM3 and SM5 sedans are rolled out in the Korean market, he says.

For the year’s first five months, RSM sales of 70,550 vehicles were down 29% compared with year-ago. Domestic deliveries tumbled 38% to 26,640 units. Sales for all of 2011 comprised 138,000 exports and 109,000 domestic deliveries.

The auto maker shut down production at its Busan plant for five days earlier this month because of sluggish sales and an inventory glut. Tavares says RSM plans to operate the factory five days a week in July until closing it for the traditional vacation during the last week of the month.

A spokesman tells WardsAuto it has yet been decided whether the new CUV will be produced at Busan or imported from another Renault plant.