Renault Samsung cuts SM3 price on sluggish sales

Renault Samsung's SM3

By Nam Hyun-woo

Renault Samsung has cut the price of its SM3 compact sedan, in what appears to be a bid to tackle its faltering sales.

According to the automaker Monday, it has cut the price of SM3 gasoline models by between 750,000 won ($700) to 1.15 million won starting this month, depending on the model.

With the cut, all models of the SM3 gasoline are priced below 20 million won, which will be the only model at such a price in the compact sedan segment, Renault Samsung said, adding that the SM3 has enhanced its cost efficiency by keeping the price level the same as that of nine years ago.

“While lowering the price, popular features including an electric parking brake and leather seats will be provided as they used to be, to maximize customer benefits,” a Renault Samsung official said.

The price of the SM3 RE, the most expensive version, will be lowered from 20.4 million won to 19.65 million won, down 750,000 won. The price of the SM3 LE will go down from 19.1 million won to 17.95 million won. The lowest PE will be discounted to 14.7 million won, down 1 million won.

Though the automaker said it is offering the discount to respond to customers' interest in the SM3 and enhance market competitiveness, industry insiders say Renault Samsung is biting the bullet as sales of the SM3 are plunging.

According to the company, it sold 213 SM3s in May this year, down 43.4 percent from a month earlier and 54.8 percent from a year earlier.

So far this year, it has sold 1,719 SM3s, which is also down 27.1 percent during the same period last year.

Given that more than 400,000 SM3s have been sold since its debut in 2002, the car, once regarded as one of the representative models in the segment, appears to be losing its competitive edge, compared to its rivals including Hyundai Motor's Avante and Kia Motors' K3.

“While its rivals -- the Avante, the K3 and even Chevrolet's Cruz -- are making major changes or minor upgrades, Renault Samsung has been neglecting the SM3, which has not been changed since September 2009,” an industry official said asking not be named. “Cutting the price without changing the model will not likely be a solution to boost SM3 sales,”

The problem doesn't only extend to the SM3, as Renault Samsung itself seems to still be recovering from a domestic slump.

In May, Renault Samsung sold 2,022 SM6 sedans, which is its main model, down 10.6 percent from a month earlier and 49.1 percent from a year earlier.

Another key model, the QM6 showed improvements with sales of 2,313 last month, up 19.4 percent from a month earlier and 4.8 percent from a year earlier, but fell short of making up for the overall contraction. Renault Samsung sold 7,342 vehicles in the domestic market last month, down 20.4 percent from April.