China’s state-owned automaker SAIC Motor is planning to cut thousands of jobs this year at its joint ventures with American carmaker General Motors, Germany’s Volkswagen and an electric-car unit, Reuters reported, quoting sources. The state-owned automaker hopes to cut 30% of its workforce at SAIC-GM, 10% at SAIC Volkswagen and more than half at its Rising Auto EV subsidiary.
While large-scale workforce reductions are rare at state-owned Chinese firms, the one from SAIC comes at a time when there is a cut-throat automotive price war going on and the nation’s economy is faltering. The workforce cut back also reflects the abundance of electric vehicles in China, a sector where SAIC and its foreign partners have rapidly lost market share to rivals like Tesla and privately owned Chinese automakers led by BYD.
The reduction in staff is expected to happen in phases this year and not as a mass layoff. A large portion will come through implementing stricter performance standards and offering payouts to lower-rated employees who resign. However, a SAIC spokesperson dismissed Reuters’ “speculation” about staff downsizing, saying that the company would not set targets for worker dismissals. The company added that it had recruited 2,000 employees in the first two months of 2024 who will focus on software and new-energy vehicles.
Additionally, a GM spokesperson in China said it would be “inaccurate” to say SAIC-GM is “reducing its workforce by 30%” while a Volkswagen China Group spokesperson said it did not plan “layoffs” and that it was “incorrect” to say SAIC-VW plans to cut 10% of its workforce.
Speaking about its low-performing employees, a Volkswagen spokesperson told Reuters that the employee performance review is a “long-term mechanism” and that SAIC-VW provides counseling and resources aiming to ensure “every employee can be qualified for their job requirements.”
While SAIC has been China’s biggest automaker for nearly two decades, its sales fell by 16% during the first two months of this year from a year earlier, as per a filing. Till the end of 2023, the company had employed 207,000 people at its parent company and major subsidiaries. Now, the company plans to offer payouts to resigning low performers at SAIC-VW, a source told Reuters.