Renault Samsung to idle Korean plant because of slowing demand image

Renault’s South Korean subsidiary announced on Thursday that it will idle its local plant for 10 days in December because of slowing demand for its vehicles.

“We are adjusting production and cutting inventory to cope with the rise in oil prices, the volatile stock market and the euro zone debt problems,” a spokesman for Renault Samsung was quoted as saying by Reuters. Renault Samsung, which builds cars at the factory in the southeastern port city of Busan, recorded a 30 percent drop in sales on the South Korean market in the first eleven months of this year. However, exports rose 30 percent in the same period, even though they declined 24 percent in November alone compared to the same month last year.

„Renault Samsung’s new SM7 model is faring badly, and its SM5 is struggling to compete with rival models such as Hyundai’s Sonata and Kia’s K5,” SK Securities analyst Kim Yong Soo was quoted by Renault Samsung’s Busan plant has an annual production capacity of 300,000 vehicles. The automaker ranks fourth in South Korean car sales, behind Hyundai, Kia and General Motors.

New car sales in South Korea fell 13 percent in November for the second consecutive month as Asia’s fourth-largest economy is slowing and free-trade deals with the EU and the U.S. slash prices on imported cars.