Global automakers are beginning to "survive the winter", and transformation is the only way out

As the weather gets colder, global automakers are also starting to "winter".

Recently, news of layoffs and salary cuts by several major auto giants has attracted widespread attention. It is reported that Daimler, the parent company of Mercedes-Benz, said that it will lay off 3% of its global employees in the next three years, which is expected to be at least 10,000 people; Audi, a subsidiary of Volkswagen, claimed that it will lay off 9,500 employees by 2025 to save billions of euros; in addition, BMW also said that it will introduce a salary adjustment plan to cut costs.

This is just the tip of the iceberg.

Earlier, several major auto giants such as GM, Ford, and Nissan also announced layoff plans, and the scale of layoffs was also quite large. According to relevant statistics, based on the current known situation, it is estimated that more than 80,000 employees in the automotive field will lose their jobs worldwide. In response, the German Association of the Automotive Industry warned that as global car sales continue to decline, there will be more layoffs in 2020.

The reason why these auto giants and some mainstream car brands have joined the army of layoffs is, on the one hand, because the global auto market has gradually weakened and car sales have continued to decline, and on the other hand, because the transition to electric vehicles and the development of autonomous driving technology are too "expensive."

Due to the impact of the US tariff policy and the Brexit incident, the unstable world economic situation has had an adverse impact on car sales. The German Association of the Automotive Industry predicts that global car sales will drop by 4.1 million to 80.1 million in 2019, a year-on-year decrease of 5%; the downward trend in global car sales will continue in 2020, and is expected to drop by 1% to 78.9 million.

A report from the German Center for Automotive Research (CAR) also shows that global sales of sedans and sport utility vehicles (SUVs) will fall again by 2020.

“The global auto market is in trouble,” Bernhard Mattes, chairman of the German Association of the Automotive Industry, said in an interview.

According to data released by the China Association of Automobile Manufacturers, as of October 2019, China's auto market sales have declined year-on-year for 16 consecutive months. Yao Jie, deputy secretary-general of the China Association of Automobile Manufacturers, said that China's auto sales are expected to fall by 10% year-on-year in 2019. This is consistent with the forecast data of the German Association of the Automotive Industry.

As the global auto market faces difficulties, automakers have accelerated their transformation to electrification and intelligence. Investing in electric and self-driving cars means huge capital costs, which has forced automakers to further save costs in the market downturn, and layoffs have become a common means of choice.

Industry experts said that in the next few years, the decline of the global auto market is expected to be curbed, and the auto market will rebound after the downward trend hits bottom. However, new growth points will mainly come from new energy vehicles and self-driving cars. Under the new growth model, the transformation of auto companies will bring about continued unemployment. Of course, the transformation of auto companies will also bring some new job opportunities. Even if the unemployment vacancies cannot be filled in the short term, this is still a positive signal.

Some industry insiders have placed their hopes on China. Although the Chinese auto market is also facing challenges, there is no doubt that China is still the most promising auto market in the world, and Chinese consumers are more receptive to new energy vehicles. At the same time, thanks to government support, China's new energy vehicle market is expanding rapidly and the commercialization trend of autonomous driving technology is improving. These will become a solid foundation for the early recovery of the Chinese auto market.

Recently, the Ministry of Industry and Information Technology of China issued the "New Energy Vehicle Industry Development Plan (2021-2035)" (Draft for Comments), which has brought new benefits to the sustainable development of the new energy vehicle industry and market. The draft opinion proposes that by 2025, the competitiveness of the new energy vehicle market will be significantly improved, key technologies such as power batteries, drive motors, and vehicle operating systems will achieve major breakthroughs, and new energy vehicle sales will account for about 25%.

In general, although the global automotive industry is experiencing a cold winter, the transformation to electrification, intelligence, and networking will drive the arrival of spring. Under the current situation, automakers should firmly step up their transformation, continue to strengthen their core technology innovation capabilities, and focus on collaboration within the industry while continuously improving the overall performance and safety of their vehicles, so that they can find a way to break through the difficulties together.