In a surprising move, Chinese automaker Saic is reportedly planning to cut thousands of jobs at its joint ventures with Volkswagen and General Motors. The cuts will also impact jobs in the electric car division, according to sources. Saic plans to retain ten percent of the jobs at Saic-Volkswagen and more than half at its subsidiary, Rising Auto EV. However, it is expected that 30 percent of jobs will be lost in the joint venture with GM.
This shift towards workforce reductions is unusual for Chinese state-owned companies, but the car industry is facing a tough price war due to weakening domestic demand. The decline in sales has been attributed to the increasing popularity of electric vehicles in China, where Saic and its foreign partners are losing market share to competitors like Tesla and BYD. To remain competitive in this rapidly evolving market, Saic plans to implement stricter performance standards and offer severance pay to lower-classified employees as part of the downsizing process.
Saic has denied reports of planned job cuts, with a spokesman calling the speculation “untrue.” Despite this denial, sources close to the company have confirmed that layoffs are indeed happening. The company did not provide specific targets for layoffs or details about strategies for downsizing. Despite these job cuts, Saic has been actively hiring employees in areas such as software and new-drive vehicles. Both GM and Volkswagen have refuted claims of large-scale layoffs in their joint ventures with Saic.
The challenges facing the automotive industry are pushing Saic to make difficult decisions about its workforce in order to remain competitive. Despite these challenges, it remains one of the largest automobile manufacturers in China with around 207,000 employees at the end of 2023 including its main subsidiaries.
In conclusion, while it may seem unconventional for Chinese state-owned companies like Saic to cut jobs during times of economic uncertainty, it seems that they must do so in order to stay ahead in an increasingly competitive global marketplace.
