Insiders said that SAIC Motor, a Chinese state-owned automaker, will lay off thousands of workers in its SAIC Volkswagen, SAIC General Motors, and electric vehicle divisions this year.
Reuters reported that the state-owned carmaker wants to cut 30% of SAIC General Motors’ employees, 10% of SAIC Volkswagen’s employees, and more than half of Rising Auto’s employees.
Large-scale layoffs are very rare in state-owned enterprises, but now as the Chinese economy is in recession and the auto price war is intensifying. This wave of layoffs reflects that SAIC Motor and its foreign partners’ market share has been rapidly replaced by Tesla and BYD.
Insiders said that the layoffs will be completed in stages within this year, and a large part of it will be through stricter performance standards, and poorly performing employees will be dismissed by paying severance pay.
However, a spokesperson for SAIC Motor denied the news, saying that the news of layoffs is purely “speculation” and “not true.” However, SAIC Motor did not answer questions about letting low-performing employees leave or other layoff strategies.
SAIC also added that it has recruited 2,000 employees in the first two months of 2024, focusing on software and new energy vehicles.
A General Motors China spokesperson said that the claim that SAIC General Motors will “lay off 30% of its employees” is “inaccurate,” but refused to elaborate.
A Volkswagen China Group spokesperson said that Volkswagen has no “layoff” plan, and the claim that SAIC Volkswagen plans to lay off 10% of its employees is “inaccurate.”
However, the Volkswagen spokesperson also refused to comment on whether the company has changed its performance appraisal, but said that the performance appraisal is a “long-term mechanism” designed to ensure that “every employee is capable of meeting job requirements.”
SAIC Motor has been China’s largest automaker for nearly two decades, but according to a document from SAIC Motor, sales in the first two months of 2024 were 16% lower than the same period last year.
According to SAIC Motor’s annual report, as of the end of 2023, the total number of employees of its parent company and major subsidiaries was 207,000.
Two sources said that SAIC Volkswagen has a rating of A to D for its employees. However, one of the insiders said that in 2023, the rating of about 10% of SAIC Volkswagen employees has declined.
This source said that D-rated employees will receive severance pay, and C-rated employees will be placed in an “uncomfortable position” to encourage them to quit.
The source said that SAIC General Motors is also using this performance-based downsizing strategy.
This source said that the 10% layoff target at SAIC Volkswagen applies to “white-collar professionals” rather than factory workers.
This source said that SAIC General Motors is also using this performance-based downsizing strategy.
