China's SAIC Motor plans job cuts at GM, VW and EV units amid automotive industry challenges, increased competition

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SAIC Motor intends to significantly reduce its workforce at its joint ventures with General Motors (GM) and Volkswagen (VW), as well as at its electric vehicle (EV) subsidiary, Reuters reported citing sources. The planned reductions include slashing 30 percent of employees at SAIC-GM, 10 percent at SAIC Volkswagen, and over half at its Rising Auto EV arm, it added. The staff cuts are not expected to occur all at once through mass layoffs but are targeted for the year 2024.

Sources indicate that a significant portion of the reductions will be achieved by enforcing stricter performance standards and providing payouts to lower-rated employees who choose to resign. Sources suggested that most cuts at SAIC-VW will involve offering payouts to low-performing employees. SAIC evaluates employees on a scale from A to D, with a rare distribution of C or D ratings in the past.

However, in 2023, around 10 percent of SAIC-VW employees received lower ratings. Rising Auto, one of two SAIC EV units, is also offering payouts to low-rated employees but will also dismiss some workers and not renew the contracts of others, one source said. This move is uncommon for state-owned Chinese enterprises and comes amid intense competition in the automotive industry, the report added.

The auto sector faces a challenging price war, compounded by economic pressures in China. Additionally, the surge in demand for EVs has led to SAIC and its partners losing ground to competitors such as Tesla and domestic firms such as BYD, it added. Responding to inquiries from Reuters, a spokesperson for SAIC denied the speculation about workforce downsizing, stating that the company does not set targets for worker dismissals.