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Samsung does not want Renault to use its name

Publication Date : 20-06-2012

 

Samsung Group wants to remove its brand name from Renault Samsung Motors with a related contract between the two pending until 2020, group officials said.

“We want to take our brand ‘Samsung’ out of Renault Samsung since we don’t have anything to do with the car sales,” a Samsung executive recently told The Korea Herald.

Samsung Card, a financial unit of the group, is still the No. 2 stakeholder of Renault Samsung, holding a 19.9 per cent stake in the carmaker which holds the fourth position in Korea in automobile market share. The card firm got its stake when the group sold its auto manufacturing unit to Renault in 2000.

However, the management right currently belongs to Renault with Samsung receiving its loyalty payments for lending its brand to the France-based automotive company.

In 2010, Samsung and Renault renewed their brand contract to use the name “Samsung” for another 10 years.

Although the exact loyalty payment figure has not been disclosed, most large-scale companies in Korea receive about 0.2 per cent of the lending company’s total sales, excluding advertising fees, as loyalties, according to industry sources.

An industry insider said that it is difficult for one side to annul the contract unless its partner firm has broken the rules of the contract or has gone bankrupt.

Renault Samsung also confirmed that the contract to use the brand name is renewed every 10 years. Unlike Samsung Group, however, the carmaker showed satisfaction with the brand name and the partnership with Korea’s biggest conglomerate.

“It is true that the brand awareness of Samsung has helped Renault further expand presence in Korea and overseas markets, especially in South America,” said a Renault Samsung spokesperson.

“Both Renault group and its Korean operation consider the relationship with Samsung successful and positive. We have no immediate plans to make any change.”

The official said it could be possible for them to further strengthen partnership in car electric devices but made it clear nothing has been planned.

Renault Samsung Motors, headquartered in Busan, was first established as Samsung Motors in 1994 and started selling cars in 1998, when Korea was hit by the Asian financial crisis.

Their takeover talks began in December 1998 and Renault acquired a 70 per cent stake for US$560 million in September 2000. At the time, the company decided to continue to use the Samsung brand possibly to upgrade its presence in the Korean market.

The maker of the SM series sedans -- SM3, SM5, SM7 and QM5 -- is recently struggling with sluggish sales. The company sold 246,959 cars last year, 9 per cent less than the previous year.

In the first quarter of this year, it also suffered the biggest drop in year-on-year sales among five major players, including Hyundai, Kia, GM Korea and Ssangyong, in the local market.

 

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