Exclusive-China’s SAIC aims to cut jobs at GM, VW ventures and EV unit, sources say By Reuters

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SHANGHAI (Reuters) – China’s SAIC Motor aims to cut thousands of jobs this year at its joint venture with General Motors (NYSE:) and Volkswagen (ETR:) and an electric-car unit, people with knowledge of the matter said. Two people told Reuters.

The state-owned automaker expects to cut 30% of its workforce at SAIC-GM, 10% at SAIC Volkswagen and more than half at its Rising Auto EV subsidiary, the people said.

Large-scale workforce cuts at state-owned Chinese companies are rare and come amid cuts in an automotive price war as the country’s economy falters. The cuts also reflect the explosion of electric vehicles in China, a region where SAIC and its foreign partners rapidly lost market share to privately owned Chinese automakers led by Tesla (NASDAQ:) and BYD (SZ: Is.

Sources said the mass layoffs will not be a lump sum staff reduction but are targeted for 2024. He said a large portion would come through imposing stricter performance standards and offering payouts to lower-rated employees who resign.

A SAIC spokesperson said Reuters’ “speculations” about reducing headcount were “not true” and that the company would not set targets for staff dismissals. SAIC did not respond to questions about its efforts to force poor performers to resign or other staff reduction strategies.

The company said it has recruited 2,000 employees in the first two months of 2024 who will focus on software and new energy vehicles.

A GM spokesman in China said it would be “incorrect” to say that SAIC-GM was “reducing its workforce by 30%” but declined to elaborate. A spokesperson for VW China Group said it did not plan “layoffs” and that it was “incorrect” to say SAIC-VW planned to cut its workforce by 10%.

A VW spokesperson declined to comment on whether the company has changed its employee performance reviews, but called them a “long-term mechanism” and said SAIC-VW provides consultation and resources aimed at ensuring That “each employee may be qualified for the requirements of his job.” Falling sales SAIC has been China’s biggest automaker for nearly two decades, but saw its sales fall 16% during the first two months of 2024 from a year earlier, according to SAIC filings. According to SAIC’s annual report, its parent company and major subsidiaries employed 207,000 people at the end of 2023.

One of the sources said most of the cuts at SAIC-VW would be through payouts given to low-performing resignees. SAIC rates employees on a scale of A to D. In the past, the company rarely gave a C or D rating, two sources said. However, for 2023, about 10% of SAIC-VW employees received a lower rating, one of the people said. D-rated employees are being offered payouts to quit and C-rated employees are being placed in “uncomfortable positions” with the intention of encouraging them to resign, the source said. The 10% target of job cuts at SAIC-VW applies to “white-collar professionals” rather than factory workers, the person said. Such performance-based pay is also being used at SAIC-GM, the person said. Reuters could not determine how widely the strategy is being employed at the GM joint venture, what other employee-reduction methods it might use, or whether factory workers would be included in the 30% target of job cuts. Is included or not. Rising Auto, one of the two SAIC EV units, is also offering pay to low-rated employees, but will also fire some employees and not renew the contracts of others, one of the sources said.

left in the dust

The job cuts are a symptom of much larger problems for state-owned automakers and their foreign partners in the world’s biggest auto market. SAIC Volkswagen was founded in 1985 and today produces the ID.3 electric car and Audi-branded vehicles, among other models. SAIC-GM was founded in 1997 and produces Chevrolets, Buicks and Cadillacs. But in recent years, SAIC and its foreign partners have seen sales decline sharply as BYD and Tesla race to capture EV market share. EV sales have grown rapidly and now account for 23% of China’s car sales, with BYD and Tesla capturing by far the largest shares of the electric sector.

China’s government granted Tesla a rare exception to its long-standing practice of letting foreign automakers form joint ventures with state-owned enterprises. Tesla in 2018 set up a wholly owned unit to manufacture vehicles at its Shanghai factory – its largest globally by production – in a bid to supercharge the development of China’s EV supply chains and give domestic automakers competition. As part of a government strategy to challenge.

BYD answered the call. Its EV sales in China have grown from about 130,000 in 2020 to more than 1.5 million last year and its global EV sales overtook Tesla late last year. Last week, BYD Chairman Wang Chuanfu predicted that the China market share of foreign brands would decline from 40% to 10% in the next three to five years.

As the electrification of industry accelerates, the Chinese government has urged state-owned entities to become more efficient and less dependent on foreign partners. But SAIC still depends on its VW and GM partnership for the bulk of its sales and profits.

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