German carmakers embark on historic job cuts as Chinese rivals flood market

{"text":[[{"start":10.7,"text":"German carmakers are embarking on their deepest ever restructuring to stem “the bleeding” from an influx of Chinese rivals that analysts warn could “permanently” shrink the backbone of Europe’s largest economy."}],[{"start":23.85,"text":"Volkswagen is preparing to expand its cost-cutting measures by axing as many as 100,000 jobs over the coming years and end production at four plants in Germany. "}],[{"start":33.650000000000006,"text":"BMW recently warned investors that it plans to spend up to €1bn in restructuring costs, which analysts said could lead to cuts of up to 10,000 jobs and a 15 per cent reduction in European car production. "}],[{"start":47.7,"text":"Mercedes-Benz told employees in Germany that summer bonuses would not be paid out as it stepped up cost-cutting. Some 5,500 staff have already taken voluntary redundancy under its current restructuring programme."}],[{"start":null,"text":"

"}],[{"start":60.6,"text":"All European car manufacturers — from Stellantis and Renault to Ford — have been streamlining their operations in recent years, but the penetration of BYD and other Chinese brands has dramatically picked up pace this year amid a sharp slowdown in China. That has forced German carmakers to retrench, despite strong resistance from their powerful unions. "}],[{"start":82.95,"text":"“The only thing you can do is cut costs, and the only significant cost reduction is excess capacity. And the most expensive capacity you have in the world by a long distance is [in] Germany,” said Citi analyst Harald Hendrikse. "}],[{"start":98,"text":"In May, Volkswagen, Mercedes-Benz, Stellantis and Renault all lost market share despite new car sales in Europe rising 4 per cent year-on-year. Meanwhile, the aggregate market share of BYD, Chery and other Chinese carmakers topped 10 per cent for the first time, according to European car industry group Acea. "}],[{"start":119.1,"text":"“Every European player is losing today,” said Thomas Besson, head of autos research at Kepler Cheuvreux. “This is a highly challenging situation for European automakers because Chinese [carmakers] are progressing [in Europe] at a much faster pace than expected, while [the European carmakers] continue to lose volumes in China and face very adverse conditions in the US, notably due to tariffs.”"}],[{"start":null,"text":""}],[{"start":142.65,"text":"Wolfsburg-based Volkswagen had already laid out its intention to cut 50,000 jobs in Germany by the end of 2030 but the latest plan could lead headcount to be slashed by another 50,000, according to one person familiar with the situation. Culling 100,000 roles from a workforce of around 625,000 would place it among the biggest-ever job cuts."}],[{"start":166.35,"text":"“I think even with that it’s questionable whether they will get ahead of the [Chinese] wave so that they can actually restore some profitability, rather than just slow down the bleeding,” UBS analyst Patrick Hummel said. "}],[{"start":179.85,"text":"The size of the potential new cuts showed the crisis affecting Volkswagen and its peers was reaching a “new dimension”, added Helena Wisbert, professor for automotive economics at the Ostfalia University of Applied Sciences in Wolfsburg."}],[{"start":null,"text":""}],[{"start":193.75,"text":"“The automotive industry in Germany is shrinking, and doing so in a lasting, permanent way.”"}],[{"start":199.4,"text":"BMW was the sole European carmaker that increased sales in the continent in May, but the group shocked investors this month with a significant cut to its profit guidance, which was attributed to a market downturn in China and the impact of the Iran war. "}],[{"start":214.9,"text":"Included in the downward revision were provisions for new restructuring measures such as job cuts to be booked later this year."}],[{"start":222.25,"text":"Since its warning in mid-June, BMW’s shares have slumped 13 per cent with investors preparing for more guidance cuts from other European carmakers. “BMW was seen by almost everybody as the best house in a difficult neighbourhood and that status got lost with this profit warning,” Hummel said. "}],[{"start":null,"text":""}],[{"start":240,"text":"The Munich-based manufacturer had already indicated that it expects a reduction in its global workforce this year of up to 5 per cent, which could mean as much as 7,700 people. Hummel estimated that the latest provisions could raise that figure to nearly 10,000. "}],[{"start":256,"text":"BMW declined to comment on the planned scope of its cost-cutting measures, while new chief executive Milan Nedeljković has stressed the need for the company to “significantly intensify and accelerate” its efforts to make savings."}],[{"start":270.3,"text":"Mercedes-Benz, which has also been hit hard by sharply declining sales in China, has warned employees that German manufacturing was weighing on cost competitiveness. The company also estimated that its output would immediately improve 15 per cent if its workers returned to a 40-hour working week from 35 hours that has broadly been in place since 1995. "}],[{"start":294.35,"text":"“We must continue to cut costs with great urgency so that we can remain price-competitive,” it said. “Despite all our efforts, the situation in Germany today is critical.”"}],[{"start":312.65000000000003,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1782603037_9677.mp3"}