SAIC Motor To Reduce Headcount At EV Unit, GM And VW JVs
China’s largest automaker, SAIC Motor will be lowering its workforce at General Motors and Volkswagen, as well as its Rising Auto electric vehicle subsidiaries.
According to Reuters, there are strong indications that the state-owned automaker aims to reduce its workforce by 30% at SAIC-GM, 10% at SAIC Volkswagen, and more than half at Rising Auto.
These large-scale workforce reductions are unprecedented for a state-owned Chinese firm and come amidst a fierce automotive price war as China’s economy falters. The cutbacks also reflect the explosive growth of electric vehicles in China, a sector where SAIC and its foreign partners have rapidly lost market share to Tesla and privately owned Chinese automakers like BYD.
As the industry’s electrification accelerates, the Chinese government has urged state-owned entities like SAIC to be more efficient and less dependent on foreign partners. However, SAIC still relies heavily on its Volkswagen and GM partnerships for a significant portion of its sales and profits, underscoring the challenges it faces in navigating the rapidly evolving automotive landscape.
Rather than mass layoffs, the staff reductions will be implemented through stricter performance standards and offering payouts to lower-rated employees who voluntarily resign. SAIC typically rates its workers on a scale from A to D, and for 2023, about 10% of SAIC-VW employees received the lower C or D ratings, a significant increase from previous years.
D-rated employees at SAIC-VW are being offered payouts to quit, while C-rated workers are being put in “uncomfortable positions” intended to encourage resignations. Similar performance-based payouts are also being used at SAIC-GM, although the exact methods and whether factory workers are included in the 30% target remain unclear.
The job cuts highlight the larger challenges faced by state-owned automakers and their foreign partners in China’s booming electric vehicle market. Despite their long-standing joint ventures, SAIC Volkswagen and SAIC-GM have seen steep drops in sales as BYD and Tesla surge ahead, capturing the lion’s share of the electric sector.
BYD’s EV sales in China have skyrocketed from around 130,000 in 2020 to over 1.5 million last year, surpassing Tesla globally. BYD’s Chairman, Wang Chuanfu, recently predicted that foreign brands would see their China market share plummet from 40% to 10% within the next three to five years.
About the Author
Subhash Nair Written work on dsf.my. @subhashtag on instagram. Autophiles Malaysia on Youtube.
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