Renault Samsung offers early retirement to all employees first time in 8 years

[Photo by Renault Samsung Motors Co.]

Renault Samsung Motors Co. has opted to cut permanent payroll on top of the earlier decision to slash 40 percent of executives as part of efforts to strengthen profitability, the top priority to receive new car manufacturing assignments from the French parent.

Busan-based Renault Samsung Motors announced Thursday it will receive applications for voluntary retirement from all employees on permanent payroll until Feb. 26, except for those hired after March 2019.

Compensation benefits are estimated an average 180 million won ($163,428.36) per worker, including 10 million won for school expenses per child of an employee and discount coupon for new car purchases.

This would be Renault Samsung Motors’ first downsizing of all employees since 900 went home in August 2012. The scale of downsizing this time is expected to reach 260.

This is an additional streamlining effort by the carmaker that earlier this month announced to slash 40 percent of executives and 20 percent in the salaries of surviving executives from this month amid plunging car output and shipments due to weak demand for its cars at home and reduced consignment from its French parent.

Last year, it sold total 95,939 cars in Korea, falling short of its yearly sales target of 100,000 units despite six new releases. Its exports also shriveled nearly 80 percent on year due to the discontinued production of Nissan Rogue, which used to make up 72 percent of its work before discontinuation.

Amid the weak performance, its parent Renault Group last week urged the Korean unit to enhance profitability.

Luca de Meo, the chief executive officer of Renault S.A., said in a video call a week ago with the head of Renault Samsung union that the parent company is reviewing three to four model replacements but production assignment to Korea is uncertain, citing doubts about the competitiveness of the Korean division.

Despite the falling production and profitability, Renault Samsung Motors’ management and union still have not reached an agreement over collective bargaining terms for last year. The two parties began the fourth round on Thursday, but the latest decision to trim employees could affect the resumed talks.

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