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Sales have fallen three times in a row! Personnel Optimization of FAW-Volkswagen Foshan Plant

2024-06-25 Update From: AutoBeta NAV: AutoBeta > News >


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As the head of the former joint venture car company, the development of the Chinese market is also beginning to encounter challenges.

According to a number of media reports, FAW-Volkswagen Foshan Branch launched personnel optimization adjustment. According to online documents, FAW-Volkswagen Foshan Branch released a planned downsizing report on May 13 that 700 employees in Foshan Branch will be laid off. FAW-Volkswagen Branch plans to select 565 people (involving 690 people) whose labor contracts expire from July 2019 to July 2024, and will not renew labor contracts with employees on the grounds that the labor contracts expire. And give economic compensation in accordance with the relevant laws and regulations.

It is understood that FAW-Volkswagen plans to issue a notice before May 25, informing the relevant employees that the labor contract will not be renewed after the expiration of the labor contract, terminate the labor contract relationship, and provide a two-stage plan: 1. From the date of the announcement, the employees who have no objection from May 25 to 31 and are willing to cooperate with the termination of the labor contract relationship shall be compensated in accordance with Never1. 2. If the employee fails to reach an agreement with the company from May 25 to 31, the company will give N months of financial compensation in accordance with the law from June 2024. In addition, FAW-Volkswagen said that the Foshan plant will temporarily suspend production from May 25 to June 10 to cooperate with related work.

In response to the rumor of "optimization of startup personnel in Foshan branch", FAW-Volkswagen responded that this adjustment means that Foshan branch does not renew some employees whose labor contracts expire for the first time, which has been reported in advance with relevant local government departments. FAW-Volkswagen shall give full economic compensation to the employees in time in accordance with the regulations, and the compensation program not only pays N times economic compensation to the employees, but also pays special benefits, performance bonuses and other additional compensation.

FAW-Volkswagen was once the largest automaker in China, winning the title of domestic passenger car sales for three consecutive years, of which 2.07 million were sold in 2019, surpassing SAIC-Volkswagen for the first time, rising slightly to 2.11 million in 2020 and down 15.7 per cent to 1.78 million in 2021. In 2022, FAW-Volkswagen sold 1.78 million vehicles, the same as the same period, but was overtaken by fully electrified BYD, which sold 1.81 million vehicles, up 149.4% from a year earlier.

BYD overtook FAW-Volkswagen for the first time in the history of BYD and the first time for a Chinese brand in the Chinese auto market. Fundamentally speaking, BYD surpassed FAW-Volkswagen. On the surface, the goal of FAW-Volkswagen winning the top spot in the passenger car market for four consecutive years was terminated, and its market position began to be loosened. Chinese brands led by BYD began to challenge the status of joint venture brands in the Chinese market and began to disintegrate the status of joint venture brands in the Chinese market.

After entering 2023, the gap between joint venture brands and independent brands began to widen. According to the data, the top five car companies in 2023 are BYD Automobile, FAW-Volkswagen, Geely Automobile, Changan Automobile and SAIC-Volkswagen. Among them, BYD overtook FAW-Volkswagen with a sales gap of nearly one million. SAIC-Volkswagen ranked fifth with 1.23 million vehicles, while only Toyota joint venture among the top 10 car companies, Dongfeng Nissan and Honda joint ventures all fell out of the top 10.

Not long ago, car blogger Sun Shaojun posted on Weibo that FAW-Volkswagen sent a push called "Breakthrough Action" to employees throughout the system. The content shows, "FAW-Volkswagen is in the last and only transition window, we have no way to go except to fight against it, we can only live with one heart and one mind." Although the content was finally proved to be untrue by FAW-Volkswagen, it still revealed the difficult situation that FAW-Volkswagen is currently facing.

From January to April 2024, FAW-Volkswagen sold a total of 510000 vehicles, while BYD sold 840000 vehicles, a difference of 330000 between the two companies. By the end of April, FAW-Volkswagen monthly sales had fallen for three months in a row, while Geely and Changan continued to grow through the expansion of new energy vehicle business, with a gap of less than 10,000 vehicles between Geely and FAW-Volkswagen. FAW-Volkswagen may be difficult to maintain the position of runner-up in sales.

Data show that from January to April 2024, the market share of Japanese brands in China was 15.2%, the lowest in recent years, while German brands fell below 20%, 19.8%, American 6.7%, French 0.3%, Korean 1.5%. The share of foreign brands decreased to varying degrees, while the share of independent brands was 55.6%, which was significantly higher than that of 51.9% in 2023.

Whether it is due or not to renew the contract, or personnel optimization, this series of actions have proved that the glory of the joint venture in the Chinese market is gone forever. In addition to FAW-Volkswagen, GAC-Honda also reported layoffs not long ago, while in October 2023, one of the Japanese joint ventures, GAC-Mitsubishi, announced its withdrawal from the Chinese market.

Under the tide of new energy vehicles, many joint venture brands have entered a moment of crisis, whether it is to survive with broken arms or scraping bones. Of course, Volkswagen is the first to realize the seriousness of the market. Keep announcing more money to invest in electrification and the Chinese market, but it is still difficult to compete with Chinese new energy brands, at least for the time being.

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