Renault to Produce SUV Only in Busan

French automaker Renault has decided to produce Sports Utility Vehicles (SUV) only with Renault Samsung and will also export them.

For this, it is expected that Renault Samsung will recruit more employees and will be equipped with basic facilities for the production center.

Jerome Stoll, the CEO of Renault Samsung, held a press conference at the “Key Museum” of Dongsung-dong, Jongno-gu, Seoul on March 22, and commented on his policy, “A factory in Busan has competitiveness in terms of productivity and efficacy compared to other factories in the world.”

Renault Group has been developing its first SUV cooperatively with Japan’s Nissan, which owns shares in common, and will commercialize them from 2005. Renault Samsung will partially join for design as well as production.

Stoll remarked, “The SUV will be focused on exports as well as the domestic market in Korea,” adding, “I will attack world markets such as Europe and Central and South America, making use of the global distribution channel.”

The annual production scale of the Busan Factory is 240,000 cars, but only 120,000 vehicles are currently sold, so the unused capacity will be temporarily utilized to produce SUVs. Additional investment for facilities is considered over the long term.

Stoll said, “For producing Renault’s SUV only in the Busan factory, employment increased and the basic conditions were provided to become the hub for the group.” In addition, the large sedan, SM7, based on Nissan’s Tiana (3500cc) will be disclosed in the beginning of next year, and SM3, adding a 1500cc’s diesel engine, will be released in the second half of next year.

Semi medium-sized sedan (1600cc) will be presented in the second half of this year.

Stoll explained, “It’s not true of suspending a technical tie-up with Nissan, and cutting down expenses through the cooperation of Renault-Nissan gives customers a benefit.”

Separate sales network with Nissan Korea, which lands in the domestic market for import automobiles, results from the differentiation of target customers, and both companies are seeking for a win-win strategy. Nissan Korea will bring in the highest class’ Infinity which doesn’t overlap with other types. Renault Samsung earned sales of 1,685 billion won, trading profits of 94.6 billion won and net profits of 83.6 billion won. Sales and net profits were lowered by 5.1 percent and 50 percent respectively compared to last year.

Na-Yeon Lee Hyun-Jin Kim larosa@donga.com bright@donga.com