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gm's layoffs come at a time when saic and gm are debating how to extend their contract, which is set to expire in 2027. rumors of gm's possible withdrawal from the chinese market are spreading from the united states to the chinese market.

the layoffs at gm account for about 1.3% of its total global workforce of about 76,000, but are mainly concentrated in the warren technology park in michigan, usa, with about 600 employees laid off.

this is the first time that volkswagen group has considered closing its factories in germany. this decision affects the lives of 25,000 employees of volkswagen group in germany, accounting for about 8.3% of volkswagen's total employees in germany.

is it that the transformation has dragged down the profitability of auto giants such as the united states, germany, and japan, or is it that the internal circulation of the chinese market has squeezed the market share of joint venture brands, forcing these industry giants to take the initiative to adjust? the reason may not be unique, but may be the result of the combined effect of multiple factors.

the adjustments made by these established automakers are not only to cope with the difficulties of transformation, but also to directly respond to the embarrassing reality of their continued decline in market share in china.

from january to august this year, data released by the china association of automobile manufacturers showed that the market share of domestic brands has risen to an unprecedented 66.9%, while german and american brands have further declined to 15.4% and 6.9%, and japanese brands have dropped to 11.5%.

therefore, the outside world is watching the next moves of the two giants, general motors and volkswagen, and whether layoffs and factory closures will affect the chinese market.

are these brands still relying on the chinese market and not willing to lose it? or are they shifting their focus and reassessing the position of the chinese market in their global layout?

01.

gm's layoffs are mainly in the united states, and saic-gm will continue

for general motors, sales in the core market of north america are not bad. it sold more than 1.29 million vehicles in the united states in the first half of 2024. in particular, the market demand for gasoline suvs and pickup trucks remains considerable.

gm's performance in the second quarter of 2024 also grew, with global net profit up 14% to $2.9 billion and global revenue up 7.2% to $47.97 billion, setting a new growth record.

in response to this achievement, gm even raised its full-year financial forecast, with adjusted earnings before interest and taxes expected to be $13 billion to $15 billion.

in the us market, gm's electric vehicle sales in the second quarter also achieved a year-on-year growth of 40%, but due to lower-than-expected demand, it eventually lowered its full-year electric vehicle production target. at the same time, cruise, gm's autonomous driving company, still suffered a loss of $450 million in the second quarter.

media reports said a gm spokesman said the company is streamlining its processes and will prioritize investments that will have the greatest impact and streamline certain teams in its software and services divisions.

according to industry insiders, the main purpose of the layoffs is to cut costs. general motors has invested billions of dollars in electric vehicles and software, and expects to make profits through selling software or providing subscription services.

in the first half of 2024, general motors' "software and services department" also frequently underwent senior management changes. the business of this department covers multiple areas such as in-car entertainment systems, security services, and subscription services.

relevant information shows that baris cetinok is currently the senior vice president of software and service product management, project management and design, responsible for managing the team that formulates gm's software development roadmap and software development, release and improvement processes; dave richardson is the senior vice president of software and service engineering, responsible for software engineering areas including embedded platforms, digital products, business solutions and super cruise advanced driver assistance systems.

whether gm's global layoffs also involve the chinese market has also attracted attention.

some media reported that general motors will discuss with saic group to reduce production capacity in the chinese market, and will also start a new round of layoffs.

in addition, since the joint venture agreement between gm and saic will expire in 2027, there are rumors that gm is hesitating whether to renew the contract. the rumor even includes that gm will sell the buick brand to saic and chevrolet will withdraw from the chinese market.

in this regard, lu xiao, who just succeeded zhuang jingxiong as the general manager of saic-gm, said: "'gm will sell buick to saic and chevrolet will withdraw from china' is a rumor. in the future, saic-gm will simultaneously focus on new and old tracks, maintain the continuity of the current transformation strategy, and continue to empower based on more new energy technologies and "oil-electric intelligence" intelligent network technology.cadillac, buick and chevrolet. "

gm also stated that its partnership with saic group and its commitment to promoting the long-term development of the joint venture have not changed. the cooperation and exchanges between the two sides are closer than ever before. in the future, they will continue to provide the best products and technologies for the chinese market and make good product plans.

general motors chief financial officer paul jacobson said at an investor conference: "our china business is a high-quality asset for both now and in the future."

although gm and saic remain determined, looking at the market performance in recent years, gm urgently needs to curb the downward trend in its performance in china.

starting from 2018, saic-gm, which is a leading joint venture brand, began to see a decline in sales, which fell by 12.13% and 14.45% in 2022 and 2023 respectively.

according to saic group's production and sales report for july 2024, saic-gm's sales in july were 15,000 vehicles, down 82.42% year-on-year; the cumulative sales in the first seven months were 240,500 vehicles, down 55.14% year-on-year.

saic-gm has become the segment with the largest sales decline under saic group.

lu xiao said: "saic-gm has taken a series of rapid and powerful measures this year to change the production-sales linkage model and strengthen business policy support for dealers, aiming to relieve channel pressure and achieve a balance between volume and profit. with the joint efforts of dealers, saic-gm has effectively reduced inventory for many consecutive months. the sharp decline in sales that the outside world is concerned about is mainly due to the decline in wholesale volume to dealers. at present, saic-gm's terminal retail sales have stabilized at nearly 50,000 vehicles per month, showing a steady recovery and upward trend."

but it is worth noting that there has been no clear statement from senior executives on whether gm's global layoff plan includes china.

however, according to media reports, gm china confirmed that gm released a new assessment plan in early august, which aims to invest in talent, increase the company's competitiveness, and is global. the plan strengthens the incentive mechanism for outstanding employees and clarifies the elimination mechanism for employees with poor performance.

02.

volkswagen plans to shut down its domestic factory for the first time, but is still increasing its investment in china

volkswagen has nearly 650,000 employees worldwide, of which about 300,000 are in germany.

volkswagen cfo arno antlitz said: "since the outbreak, sales in the european market have not recovered. europe's overall car market deliveries have fallen by about 2 million vehicles from the peak. for the volkswagen group, about 500,000 vehicles have been lost, equivalent to the sales of two factories. the volkswagen group needs to increase productivity and reduce costs, so it has proposed a plan to consider closing german factories."

volkswagen group ceo oliver blume said the closure plan includes a car manufacturing plant and a parts plant. if the plan is finally implemented, it will be the first time in volkswagen's history that a factory has been closed in germany.

as time goes by, more details gradually surface. according to media reports, the two factories planned to be closed are the osnabrück volkswagen factory in lower saxony and the dresden factory in saxony, involving a total of 25,000 employees, accounting for about 8.3% of volkswagen's total number of employees in germany.

volkswagen group executives said the goal of the move is to "save 10 billion euros in operating costs by 2026."

volkswagen group has always been an active promoter of transformation, and its global layoffs have actually been going on for some time. however, due to the fact that its cariad software company has not been able to keep up with the pace of the market, the digital capabilities of its new models have always been unable to meet market demand.

according to the official financial report, volkswagen group's operating profit in the first half of 2024 was 10.1 billion euros, a year-on-year decrease of 11%; sales in the chinese market during the same period were 1.345 million vehicles, a year-on-year decrease of 7.4%, and china's market share also fell from 40% at its peak to 30.9%.

however, in terms of performance in the chinese market, volkswagen is one of the few joint venture brands that still maintains sufficient market size, especially in the smart electric vehicle market. volkswagen's id. family can even be said to be the only joint venture model that can be shown off.

according to the sales data of the id. family released by saic volkswagen in the first half of 2024, its cumulative sales reached 61,000 units, a year-on-year increase of 148%. among them, the delivery volume of new cars in june reached 10,572 units, a year-on-year increase of 170%.

these are just the data for saic volkswagen. although faw-volkswagen has not announced the sales of its id. family, the half-year sales of the id.4 crozz alone have exceeded 20,000 units, and its overall sales are also quite impressive.

this is of course the result of volkswagen group's emphasis on the chinese market.

compared with automakers in the united states, japan and other countries, german automakers have increased their investment in the chinese market this year.

of course, audi's parent company, volkswagen group, has a more comprehensive and in-depth investment and layout in the chinese market.

the first model id. launched by volkswagen anhui, its third joint venture in china, has already been launched. in april this year, volkswagen group also announced an additional investment of 2.5 billion euros to further expand volkswagen anhui's production and r&d capabilities.

in addition, volkswagen has also participated in investments in power battery company guoxuan high-tech and artificial intelligence technology company horizon robotics in china, and cooperated with new car-making force xiaopeng motors to develop a new smart electric vehicle (planned to be launched in 2026), ushering in a new era of joint ventures and actively absorbing and learning from china's local technological innovations.

the investment strategies and attention paid by germany, the united states and japan to the chinese market are changing. although the three major german automobile groups are also generally facing the reality of declining sales, they are still trying to keep up with the pace of electrification and intelligence, and have not slowed down the research and development and deployment of electric vehicles.

although volkswagen is also preparing to make big moves in the hybrid market, its focus on electric vehicles is the largest among all joint venture brands.

american brands also intend to slow down the pace of electrification in their home markets, and hybridization is being elevated to a higher level, which also affects their product layout in the chinese market.

this change is bound to further affect their market share in china.

03.

there is less than a month left until the third quarter of 2024, but in these nine months, more than 20 automakers and supply chain companies including gac honda, gac toyota, tesla, and hyundai have announced layoffs, involving more than 80,000 employees.

no one is immune, whether foreign capital, joint ventures or new forces.

at the beginning of this year, saic feifan's intelligent driving development team pp-cem laid off all employees, with a total layoff of nearly 200 people.

in may this year, avita changed from a direct sales model to a dealer model. the adjustment of sales channels forced a group of direct sales system employees to change jobs. for those who were unwilling to transfer to dealers, avita offered n+1.5 compensation.

in the first half of this year, tesla also announced global layoffs. according to the latest data, tesla currently has about 121,000 employees, a reduction of more than 14% from 140,000 at the end of last year.

the stellantis group has also carried out multiple rounds of layoffs. in march this year, stellantis laid off 400 technical workers and software engineers in the united states; it then signed a further voluntary layoff agreement with the italian trade union to lay off 2,500 people in italy; at the end of july, stellantis laid off more than 1,200 engineers in europe and the united states.

since september, dongfeng honda and saic maxus have also announced layoffs.

dongfeng honda has the largest scale of layoffs, and is expected to lay off 2,000 employees. the laid-off employees will receive n+2+1 compensation.

in addition, gac honda plans to shut down its fourth production line with an annual production capacity of 50,000 vehicles in october this year. dongfeng honda said that it currently has three vehicle factories and a new energy factory under construction in wuhan. among them, the second factory will suspend production in november 2024, and the new energy factory is expected to start operation in september 2024.

the layoffs and factory closures of many automakers have made 2024 an absolute year of reshuffle in the auto market.

the rapid change in market demand has completely overturned the original market structure. as market competition becomes increasingly fierce and profit margins continue to shrink, layoffs have become a necessary means to control costs.

however, layoffs can only serve as a short-term emergency measure, but it is not a solution to the problem.

the trend of joint venture brands' market share in china continuing to decline in the short term will continue. to fundamentally reverse the downward trend, it is ultimately necessary to create new and cutting-edge vehicle models that are more attractive to chinese consumers.

of course, the pain of this transformation does not only apply to joint venture brands, but china's independent brand camp also knows the bitterness and sweetness.

a relatively pessimistic point seems to be foreseeable. a round of brutal reshuffle has begun. some brands are destined to be gradually marginalized and may quietly leave without anyone noticing.

the year 2024 is destined to be the end of the prosperous era of joint venture brands, and of course the beginning of a new stage that will make everyone feel a little tired.