SAIC-VW, for example, was able to reduce Mike Chen’s take-home pay by reducing working hours and cutting bonuses, without tinkering with his base pay, which typically covers up to half the compensation workers expect when they join.īYD, China’s largest EV maker, advertised a position in August at its Shenzhen factory with an estimated monthly income of 5,000-7,000 yuan, but the base salary was 2,360 yuan ($324). Including factories making combustion-engine cars, China had the capacity to produce 43 million vehicles a year at the end of 2022, but the plant utilisation rate was 54.5%, down from 66.6% in 2017, China Passenger Car Association (CPCA) data show.Īt the same time, pay cuts and lay-offs in the auto industry and its suppliers – which employ an estimated 30 million people according to Chinese state media – are hitting living standards at a time when Beijing desperately wants to lift consumer confidence from near record lows.Ĭutting salaries is illegal in China, but complex pay structures offer ways around this. ![]() ![]() CEO Elon Musk has since doubled-down on his strategy with more cuts announced last month. “China really has to learn to walk on two legs.”Ĭhinese plants already were far from running at full tilt when Tesla first cut prices in October last year and then again in January. “The focus on production and supply is lopsided,” said George Magnus, research associate at Oxford University’s China Centre, adding that inadequate attention to demand ultimately leads to inventory overhang, price cuts and financial stress. Exports leapt 81% but domestic sales only crept 1.7% higher – despite the widespread price cuts. In the first seven months of 2023, China sold 11.4 million cars at home and exported 2 million, but growth came almost entirely from abroad. The problem is that while there has been huge investment in production capacity, helped by large state subsidies, domestic demand for cars has stagnated and household incomes remain under pressure, economists say. SAIC did not respond.Įconomists warn that China’s auto sector could even become a drag on economic growth because of the fallout from the price war, which would be a stark turnaround for a car industry that is by far the world’s biggest. It said making cars at night eased the burden on power grids and that healthy, good working conditions were a high priority. Reuters interviews with 10 executives of carmakers and auto parts suppliers, as well as seven factory workers, point to a broader industry in distress, with penny-pinching on everything from components to electricity bills to wages – which is in turn hitting spending elsewhere in the economy.Īsked about the SAIC-VW plant where Chen works, which makes combustion-engine cars, VW said pay at joint ventures varied based on working hours and bonuses. The price war triggered by Tesla has sucked in more than 40 brands, shifted demand away from older models and forced some automakers to curb production of both EVs and combustion-engine cars, or shut factories altogether. ![]() “SAIC-VW used to be the best employer and I felt honoured to work here,” said Chen. Millions of auto workers and suppliers in China are feeling the heat as an electric vehicle price war forces carmakers to shave costs anywhere they can. SHANGHAI (Reuters) – As Shanghai sweltered in a heatwave in June, the car factory where Mike Chen works switched production to night shifts and dialled down the air-conditioning.įor Chen, toiling through the early hours in his sweat-soaked uniform, it was the latest slap in the face after cuts in bonuses and overtime slashed his monthly pay this year to little more than a third of what he earned when he was hired in 2016.Ĭhen, 32, who works for a joint venture between China’s state-owned car giant SAIC and Germany’s Volkswagen, is far from alone.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |