A well known car company giant announced layoffs, the first layoff in 25 years!The official response

Mondo Technology Updated on 2024-01-22

Introduction: On December 3, Honda Motor announced that it would lay off about 900 contract workers at its Chinese joint venture, Guangqi Honda, due to its rapid shift to the electric vehicle market.

According to the news, Guangqi Honda laid off 900 people, and up to now, Guangqi Honda has about 1 employee30,000, the proportion of layoffs is as high as 7%. Observers say Honda Motor has implemented a layoff plan for the first time since 1998, when it made a joint venture with China's Guangzhou Automobile Co. to produce cars, and such large-scale layoffs are rare in the entire auto industry. Up to now, there have been rumors of layoffs at Guangqi Honda, but it has not disclosed which positions are involved or which models are pointed. For the laid-off employees, the issue of financial compensation, which is the most concerning, was also not elaborated. However, according to the analysis of industry insiders, as a joint venture, the compensation for this layoff should not be too low.

Just when the outside world was talking about the compensation for layoffs, Honda Motor also made an official explanation on the layoffs, saying that Guangqi Honda had terminated the personnel dispatch agreement with the labor company this time. In other words, Guangqi Honda's 900 layoffs did not involve regular employees, but its labor dispatch personnel. A spokesman for Honda said that Guangqi Honda's production is currently decreasing, so the dispatch contract will also be terminated, but Guangqi Honda will provide financial compensation in a timely manner in accordance with laws and regulations, and actively assist relevant personnel to re-employment.

As one of the "top three Japanese companies", Guangqi Honda's large-scale layoffs are extraordinary. As we know, Guangqi Honda was officially registered in 1998 and is a joint venture company integrating automobile production and research and development, with considerable sales of many of its products, and was once the most popular car brand in the domestic automobile market. In the 25 years since its establishment, Guangqi Honda has been steadily growing in scale, and Guangqi Honda's layoffs are the first time in its 25 years of establishment, so it has been controversial.

So the question is, why did this fuel vehicle giant, which has been deeply cultivated in the Chinese market for 25 years, come to the point of large-scale layoffs?On this issue, observers said that the voluntary transition to electric vehicles and the continued shrinkage of China's fuel vehicle market may be the main reasons for Honda's layoffs.

First, transform the electric vehicle market.

With the increasing penetration rate of electric vehicles in the world, the trend of electrification seems to be irreversible, and Honda, as one of the "top three Japanese manufacturers", has begun to deploy electric vehicle models. According to sources, Honda has held a strategic meeting on the "electric vehicle transition" and expects to achieve full electrification by 2027, including hybrid and pure electric;At the same time, Honda will not launch new pure fuel models in Chinese mainland. In other words, in the process of Guangqi Honda's full transition to electrification, its combustion engine vehicle production capacity will be gradually reduced until it is completely discontinued.

Secondly, the sales volume in the Chinese market has declined severely.

We know that China is tied with the U.S. as Honda's largest consumer market. In the first 10 months of 2023, Honda's global sales reached 3.2 million units, and the overall sales volume continued to increase significantly. Among them, Honda's sales in the U.S. increased significantly due to strong demand in the U.S., but sales in China were not optimistic.

According to the data, in 2022, Guangqi Honda's annual production will be 76780,000 units, a decrease of 245%;In 2022, Guangqi Honda's annual sales volume will be 74180,000 units, down 493%。Since the beginning of 2023, Guangqi Honda's production and sales have deteriorated further, and in the first 10 months of 2023, its cumulative production was 52050,000 units, a year-on-year decrease of 2052%;The cumulative sales volume is 49940,000 units, down 2155%。

Judging from the data alone, the fuel vehicle giants that once thrived in China's auto market are now encountering an unprecedented "dilemma", and production cuts, transformations, and layoffs may have become the most urgent operations at present.

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