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Another parts giant cuts tens of thousands of jobs!

2024-05-27 Update From: AutoBeta NAV: AutoBeta > News >

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Forvia, the French auto parts supplier, announced plans to cut costs and cut more than 10000 jobs over the next five years, affecting about 13 per cent of employees, mainly by replacing former employees and cutting temporary staff. It is understood that Freya has 75000 employees worldwide by the end of 2023.

Freya, formed by the merger of Faurecia and Hella in 2022, is one of the world's major suppliers of automotive seats, interiors, electronic systems, lighting systems and other automotive parts, as well as the world's seventh largest supplier of automotive technology. In response to the layoffs, Freya said that as Chinese competitors enter the European market with more competitive electric cars, the company is preparing for the next competition.

On the same day, Freya released its 2023 annual report, showing that the company's annual sales revenue was 27.25 billion euros and operating profit was 1.439 billion euros, an increase of 10.9% and 35.7% respectively over the previous fiscal year. The growth was gratifying, but investors quickly learned the problem: the EMEA region, including its European base, accounted for nearly half of the company's revenue, but contributed only 20 per cent of its operating profit. The company aims to increase that to 35 per cent through a series of plans such as layoffs.

It is worth mentioning that although Freya is clear about the pressure brought by Chinese competitors, it is undeniable that Freya itself is also a beneficiary of international cooperation. Freya's business in Asia, especially in China, is growing particularly well. According to the data, Freya's sales in China reached 5.85 billion euros in 2023, with a growth rate of 17.7% far ahead of other major regions. Freya revealed that 45% of China's revenue comes from domestic manufacturers such as BYD and ideal Motor, while the other 55% comes from foreign car factories that have set up factories in China.

At present, a new round of layoffs is sweeping the European auto parts supply chain industry. In the process of the rapid transformation of the automobile industry to electrification, with the changes in the relationship between external suppliers and automobile enterprises, suppliers not only face the gradual weakening of their own advantages, but also consider the direction and speed of the transformation.

The electrification transformation of automobile industry has a great impact on traditional automobile enterprises and supply chain. Electric car parts research and development requires a lot of money, while some European companies need to maintain a leading position in the field of traditional fuel vehicles, which means double investment in two sets of technology platforms. In Europe, however, overall car sales are still at an all-time low because of the slow popularity of electric vehicles. In addition, the profit margins of traditional auto parts suppliers are also declining, making it difficult for companies to achieve revenue and profit growth. In order to reduce costs, when R & D investment can not be reduced, many enterprises can only choose to lay off staff.

In this round of industrial reform, both Chinese car companies and Chinese supply chain enterprises are showing a faster speed of transformation, while overseas car companies and supply chain enterprises, although they have already started the road of transformation, are obviously slower than their Chinese counterparts. At the same time, the current changeable industry, international situation and other external environment, also let the elephants of the giants turn around, under more pressure. Since 2024, a number of supply chain giants have announced layoffs, including Bosch, Valeo, ZF, mainland, and now Freya, a number of supplier giants plan to lay off more than 30,000 people. In addition, Schaeffler and Horse Group have been warning of possible layoffs recently.

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