[단독]Renault Samsung, which has fallen short of deficit, cannot pay for the use of the’Samsung’ brand

Renault Samsung’s Busan Plant, which once stopped operating due to poor sales in September last year. [뉴스1]

It turned out that Renault Samsung Motors, which recently started restructuring, failed to pay the brand royalties (royalties) it paid to Samsung every year. Although it was before the announcement of earnings in 4Q (October-December last year), it is due to a definite turnaround in eight years since 2012. The two companies have already terminated the contract for the use of the’Samsung’ brand in August of last year, but they are still in a two-year grace period.

According to the business community on the 27th, Renault Samsung Motors decided not to pay 2020 dividends (including brand royalties) to Samsung Card this year. A Renault Samsung official said, “Because the deficit last year is clear, there is no need to pay royalties or dividends to Samsung. Even in the past, we did not pay royalties to Samsung during the deficit period.” Since Renault acquired Samsung Motors in 2000, Renault Samsung is the second largest shareholder of Samsung Card (19.9%) after Renault Group BV (79.9%). In the first quarter of each year, Samsung Card disclosed 30.9 billion won in dividends from Renault Samsung in 2019 and 9.7 billion won last year.

Source: Electronic disclosure system, industry synthesis [단위: 억원]

According to the contract between the two sides, “In the year before tax operating profit occurs, about 0.8% of product sales are paid to Samsung.” As far as operating profit occurs, Renault Samsung pays dividends (including brand royalties) to Samsung Card every year, and some of it is received from Samsung Card by Samsung Electronics and Samsung C&T, the owners of the Samsung brand.

The brand contract, which Renault Samsung and Samsung renewed every 10 years, ended last August. Currently, there is a two-year grace period (expired on August 4, 2022) after the contract ends.

According to the business community, Samsung Card and Samsung Electronics are not willing to propose an extension of the brand contract with Renault Samsung. Some of Samsung’s claims that “the stake relationship with Renault Samsung should be severed” for cooperation in the semiconductor and battery business with automakers are also appearing.

There is a possibility that Renault Samsung will replace the company name and brand with’Korea Renault’ (tentative name) in the future. Renault’s rhombus mark is affixed to the small SUV’Joe’, which has been sold in Korea since last year. In the metropolitan area, many business branches have already changed their interiors using the yellow color that symbolizes Renault. However, it is known that the preference for the Samsung brand remains in the Gyeongsang-do area adjacent to the Busan plant.

The Renault mark is affixed to the group Renault Samsung entered domestic sales last year. [사진 르노삼성차]

Renault Samsung is currently undergoing restructuring under the name’Survival Plan’. Until the 26th of next month, all employees are receiving their desired retirement. The executive decided to cut the number by 40% and cut wages by 20%. It has also decided to sell the paper used as a service center in Ilsan Techno Station (TS) in Gyeonggi Province. Renault Samsung’s direct service store is now only one in Busan.

Reporter Kim Young-min [email protected]