The big names in automobiles close a very complicated year. On the one hand, because European, American and Japanese manufacturers continue to have their foot changed in the face of growing Chinese competition, with brands capable of selling electric cars much cheaper. On the other hand, because both the US Administration and the European Commission have planned a battery of tariffs to try to put a stop to imports of cheaper vehicles. And to that is added a market where sales are not accelerating and a mismatch in their production strategies that, as usually happens, will translate into thousands of layoffs and incentivized dismissals. A staff cut that companies are announcing in dribs and drabs but, practically, without rest.
The last multinational to confirm a workforce cut has been Volkswagen. For months now, the threat of closures and layoffs in Germany has been hovering, something that has never happened and that entails an economic and political earthquake when there are only a few weeks left until the general elections in that country. Finally, the car manufacturer has reached a agreement with the powerful IG Metall union which will see 35,000 casualties between now and 2030, but in an agreed manner and without closures.
Volkswagen wants to save up to 4,000 million euros a year. Not only will it encourage these departures, but it will also reduce the bonuses of nearly 4,000 managers and launch a review of the salary system that, according to IG Metall, is “decades old.” That analysis will begin this next year with the idea of it being underway in 2027.
The agreement comes after protests by Volkswagen’s 120,000 employees in Germany. “No plant will be closed, no one will be fired for operational reasons and remuneration will be assured in the long term,” justified the president of the German giant’s works council, Daniela Cavallo, upon reaching an agreement with the company and despite the staff reduction that will be carried out in the coming years.
Companies are resizing and transforming and that will lead to job cuts in all markets. “In Japan, 5.5 million people work in the automobile industry, including those who manufacture combustion engines,” Toyota president Akio Toyoda explained a few weeks ago. “If electric vehicles simply become the only option, even for our suppliers, many of those jobs will be lost,” he added in statements collected by the agency. Reuters.
Toyota, for now, has not announced mass layoffs. Yes, his compatriot Nissan has done it. In November it confirmed a cut of nearly 9,000 jobs – which will not affect Europe – with the aim of recovering profitability in the United States and China, which will mean a snip to its workforce of around 7%.
This restructuring also occurs before the big business move that the Japanese group has just announced: its merger with Honda and Mitsubishi, which will create the third largest car manufacturer in the world. “The rise of Chinese automobile companies and new players has greatly changed the automobile industry,” explained Honda CEO Toshihiro Mibe, confirming the integration of the three brands. “We have to develop capabilities to fight them in 2030, otherwise we will be defeated.”
New RED Mechanism in Spain
Spanish factories are not exempt from this reconversion process either. In the last Council of Ministers of the year, the Government has activated the RED Mechanism – the new ERTE format created in the labor reform in the face of cyclical and sectoral crises – with the aim of saving nearly 3,000 jobs in the automotive sector of the Community. Valencian. Of them, practically half correspond to Ford Spain, which has had an ERTE deployed in Almussafes for objective reasons and faces complicated months until the arrival of a new hybrid model, scheduled for 2027.
The American giant had left Spain out of the job cuts it announced in November. In total, nearly 4,000 layoffs throughout Europe, the majority in Germany. In the latter case, it is an escalated restructuring, because it will take place until 2027 and which was justified by the “important competitive and economic obstacles” that it is encountering “in Europe.”
Other manufacturer, Audi – which is also part of the Volkswagen group – has presented a similar number of layoffs to the unionsespecially in the German market, but in areas that would not be directly linked to manufacturing and that has been put on the table because the results are not consistent. At the end of the third quarter of 2024, its net profit had been cut by almost 46%, although despite that it earned 2,425 million euros.
Manufacturers are dealing with this conversion towards electric cars and with sales that are not going well. In November, new car registrations fell by almost 2% in the European Union as a whole, according to data published by the employer’s association, the European Automobile Manufacturers Association (ACEA). However, this data hides very different situations, because it includes a rise of 6.4% in Spain and a fall of more than 12% in France or almost 11% in Italy.
In this context, manufacturers are asking European authorities to rethink the transition framework towards vehicles without polluting emissions because, otherwise, they say, these job cuts will continue. “ACEA companies have pledged 250 billion towards the transition to green mobility and, like everyone else, we want that to be successful. Unfortunately, the honest assessment is that the transition is not going as planned and sticking to rigid rules leads to potential irreversible damage,” said the president of ACEA and CEO of Renault, Luca de Meo.
Meanwhile, in the United States, General Motors also joins this wave of losses. The owner of Cadillac and Chevrolet announced nearly 1,000 layoffs just after the general elections in the US, from which Trump emerged as the winner after promising new tariffs on vehicles and components manufactured in Mexico and Canada. The company justified it by the need to “realign its priorities” and “gain” in “speed and efficiency.” In this case, it is a company that is basically American, because of its almost 75,000 employees, more than 50,000 correspond to their country of origin.
And although the reconversion of the automobile is almost always focused on its shift to electric or low-emission cars, the truth is that among the actors in this less polluting technology there are also layoffs. The Swedish battery manufacturer Northvolt has cut 1,600 jobs in the final stretch of the year – out of a total of 6,500 – because plug-in sales are not growing and it cannot maintain the production levels it anticipated. “We must ensure that we take the right measures, at the right time, in response to the headwinds in the automotive market and the industrial climate in general,” assumed the Nordic company. A headwind that, for the moment, does not abate.
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