The scale is over 1,000 people! Sales declined, overcapacity, Guangqi Honda laid off a large number of employees

Car stuff

2024-05-16 19:04Posted in Beijing Automotive Creators

Car stuff

Author | Janson

Editor | Zhihao

The old joint venture car factory has laid off many employees, and Guangqi Honda, which is not worried about selling, has also begun to worry.

Che Dongxi reported on May 16 that according to Guangqi Honda insiders, from May, Guangqi Honda has launched a large-scale layoff plan through a phased notice, which is expected to affect more than 1,000 employees.

According to internal sources, the move is a company-wide layoff that involves multiple departments with a focus on production.

At present, Guangqi Honda has begun to implement the resignation process, mainly in the form of voluntary resignation, and provide corresponding economic compensation.

▲Guangqi Honda Zengcheng Plant

Regarding the layoffs, Guangqi Honda responded to the outside world that the personnel optimization is to ensure the company's long-term sustainable development and accelerate strategic transformation. This includes measures such as not renewing the first employment contracts of some employees in the production field and terminating labor contracts through voluntary negotiation.

It is worth noting that this layoff may not only affect front-line employees in production, but also affect managers at the level of "section chief".

Previously, at the end of 2023, Guangqi Honda also reported layoffs. At that time, only 900 contract workers were involved, and no regular employees were involved.

According to the statistics of the State Information Center, the market share of joint venture brands in China has been declining, and the market share of joint venture brands in China has dropped to less than 60% since 2022, and will further decline to 50.2% in 2023.

According to the data provided by Honda, Honda's market share is currently stable at around 3%.

In addition, in 2023, the NEV penetration rate of joint venture automakers will only be 5.1%, far lower than the 59.4% of domestic brands, and joint venture automakers are also facing challenges in the development of new energy transformation.

It is not difficult to see that in the face of market pressure, the cold air of Guangqi Honda has also spread to the front-line formal workers.

In addition, Guangqi Honda is not the only joint venture car company facing pressure, SAIC Volkswagen and Toyota have also carried out layoff plans.

At the same time, GM has also made adjustments to its head in China to respond to future market pressures.

It can be said that at present, not only Guangqi Honda, but the entire joint venture car company is facing systemic problems.

1. Honda launched a large-scale layoff of 1,000 employees, mainly employees in the production field

On December 2, 2023, Honda carried out a layoff, when Honda, which decided to transition to the electrified market, was faced with a surplus of personnel after the decline in sales of gasoline vehicles, so it laid off about 900 contract workers, and did not involve regular workers.

And the layoffs for regular employees came very quickly, only six months after the last one. According to insiders, "many employees are already undergoing pre-departure health checks. At the same time, the source also pointed out that although the layoffs are expected to continue until August, the layoffs will be more frequent in May.

▲Honda's new electric brand "Ye"

According to the relevant provisions of the Law of the People's Republic of China on the Prevention and Treatment of Occupational Diseases, only "workers engaged in operations that are exposed to occupational disease hazards" are generally required to undergo the resignation physical examination provided by the company before leaving the company.

At the same time, this layoff may not be limited to grassroots employees. Guangqi Honda's anonymous management noted that Guangqi Honda's layoff plan could affect middle management.

He explained that while there were no layoffs for middle managers, the salary of one section chief was equivalent to the salary of two workers, and that the section chief-level management could be affected in the possible future streamlining restructuring.

▲Guangqi Honda production line

Judging from the available news, the current layoffs are mainly in production, which may be related to Guangqi Honda's current decline in sales.

According to the 2023 annual report released by GAC Group, GAC Honda's sales in 2023 will be 640466 units, a decrease of 13.66% from the previous year.

From the perspective of Guangqi Honda's best-selling sedans and SUVs, Accord and Haoying will sell 174447 and 122213 units respectively in 2023, accounting for 41.2% of total sales, while compared to 2022, Accord and Haoying will sell 220771 and 128491 respectively, down 21% and 4.9% respectively.

At the same time, Guangqi Honda's operating income in 2023 will be 93.528 billion yuan, a year-on-year decrease of 18.75%.

In addition, this downward trend is also reflected in Guangqi Honda's capacity utilization.

GAC Group's annual report pointed out that in 2023, GAC Honda's production capacity will be 651,200 units, and the capacity utilization rate will be 84.57%. In comparison, the capacity utilization rate in 2022 was almost full at 99.71%.

Entering 2024, Guangqi Honda's market performance is under continuous pressure.

According to the data, Guangqi Honda's sales in April were 24,673 units, a year-on-year decrease of 2.93%; The cumulative sales in the first four months of this year were 141649 units, a year-on-year decrease of 19.01%.

In the face of such market pressure and overcapacity, it is reasonable to reduce front-line production personnel.

Second, the joint venture brand loses and many joint venture car factories lay off employees, and the maximum compensation is N+4

From the perspective of the entire market environment, the current decline of joint venture brands is due to the general environment of the entire industry, the rise of domestic brands, and the increase in the penetration rate of new energy are the key factors that lead to this factor, rather than the difficulties of Guangqi Honda.

▲Trends in China's passenger car market (China Association of Automobile Manufacturers)

From the perspective of the market share of fuel vehicles, the penetration rate of new energy vehicles in the domestic retail market reached 43.7% in April 2024, an increase of 11.7% from 32% in the same period last year, according to the China Passenger Car Association.

Among them, the penetration rate of NEVs of domestic brands is 66.8%, while the penetration rate of NEVs of mainstream joint venture brands is only 7.5%.

At the same time, the market share of joint venture vehicles is also being eroded, and in April 2024, the retail sales of mainstream joint venture brands were 450,000 units, down 26% year-on-year and 9% month-on-month.

Among them, the retail market share of German brands was 19%, down 2.2 percentage points year-on-year, Japanese brands had a retail market share of 15.2%, down 3.6 percentage points year-on-year, and American brands had a retail market share of 5.9%, down 2.6 percentage points year-on-year.

▲SAIC Volkswagen plant

And this data also confirms that in addition to Guangqi Honda, SAIC Volkswagen and Toyota have also issued a "voluntary resignation" plan, and the change of head of GM China is related to market pressure.

Recently, companies such as SAIC Volkswagen and Toyota are also making employee changes.

According to media reports, SAIC Volkswagen and Toyota's employee adjustment plans mainly take the form of voluntary registration, and the compensation standard is N+3 or N+4.

Among them, Volkswagen's policy is relatively clear, and the compensation standard for regular employees who voluntarily leave their jobs is N+4.

▲Steve Hill, Senior Vice President of General Motors and President of General Motors China

On the other hand, GM announced on May 8 that Steve Hill, currently vice president of global commercial operations, will take over from Julian Blissett on June 1 as senior vice president of GM and president of GM China, with full responsibility for GM's business operations in China.

Not only are the above-mentioned companies joint ventures, but their market performance has also declined to varying degrees in the previous stage.

It can be said that a "self-help tide" of joint venture car companies to open up sources and reduce expenditure is about to begin.

Conclusion: Joint venture automakers are facing pressure to transform

At present, the penetration rate of new energy vehicles in China's auto market is increasing, and the number of self-owned brand products is also gradually increasing, which gradually squeezes the living space of joint venture car companies.

In the face of such market pressure, car companies, including Honda, are also actively transforming and releasing a series of new energy product lines.

However, at present, the vast majority of joint venture vehicles are still half a beat slower in the layout of new energy vehicles.

At the moment when the pressure of transformation is approaching, how to fight back of joint venture car companies will be a topic worth paying attention to in the future.

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