Why Renault aims to establish Korea as export hub

Renault Chairman Luca de Meo introduces the company strategy for the region during a press conference held in Seoul, Tuesday. / Courtesy of Renault Korea

By Kim Hyun-bin

French carmaker Renault has selected Korea to become its export hub for its large vehicle lineup despite suffering continuous labor-management conflicts and low brand recognition in the country.

In the Korean market this year, Renault sold only 39,487 vehicles from January to September, placing it in fourth place with a mere 3.9 percent market share. Renault's labor union is known to have challenged management by conducting strikes for three consecutive years until last year. This year, Renault Korea's labor union and management successfully completed wage negotiations without a strike for the first time in four years.

Despite the difficulties, Renault Chairman Luca de Meo said during a press conference held Tuesday that Korea will become the French carmaker's export hub supplying not just the Asian region but also Europe.

“We have a new lineup of large cars offering premium features and industry-leading tech. We want to make Korea into a key export hub for the large segments,” Meo said.

Korea has not been a pleasant market for foreign automakers ― excluding luxury brands ― and the question lies in why Renault is so eager to expand and increase its base here in the country when in the past there were even rumors of the company withdrawing its business from the Korean market.

“Making it an export hub could mean a fall in the number of vehicles allocated for the domestic market as the plant becomes export-oriented, which can be criticized for neglecting Korean consumers. However, as domestic sales are currently low, the company seems to be hoping to preserve local jobs with increased exports,” an industry official said.

When high-ranking key personnel such as Meo visit the country, it is usually interpreted as a sign of high expectations for the business here.

After years of sluggish profitability, Renault Korea seems to be making some profits through its XM3 exports to the European market. The XM3 model was developed through Renault Korea's active participation in the R&D process.

A total of 56,719 XM3 vehicles, produced at Renault Korea's Busan plant, were exported last year. This year, 73,403 vehicles were exported through September, already exceeding last year's performance.

To fuel future growth better, the chairman announced that the company will invest hundreds of millions of euros in Korea over the next six years, mainly in the R&D field.

In addition, there is increased cooperation between Renault Korea and Geely Auto, a major Chinese carmaker.

Geely acquired a 34 percent stake in Renault Korea this year and became its second-largest shareholder. The two companies announced a plan to jointly develop a hybrid car and produce it at the Busan plant in 2024.

“If the cooperative project between Geely and Renault goes according to plan, there will be plans for the production of more new cars at the Busan plant,” Meo said.