Under the wave of layoffs of car companies, who is more generous in compensation?

Gasgoo Cars

2024-06-19 10:34Posted on the official account of Shanghai Gasgoo

As the Matthew effect in the auto market becomes more and more significant, superimposed on the extreme involution and the price war tends to normalize, some car companies have been impacted and are facing the dilemma of sharp decline in profits and continuous decline in sales. In order to reduce operating costs and expenses, some car companies have reduced production capacity and reduced personnel. This is a cost-effective means that can be effective in a short period of time.

Layoffs involve compensation for layoffs. According to Article 40 of the Labor Contract Law, when terminating an employment contract, an enterprise shall notify the employee in writing 30 days in advance or pay the employee an additional month's salary. In other words, the "N+1" compensation standard is compliant. However, there are also companies that have stricter or more generous compensation standards for layoffs.

According to incomplete statistics from Gasgoo, from the second half of last year to the present, more than 13 brands have launched layoff plans. What are the similarities and differences in the reasons, scale, and compensation standards of layoffs for each brand? Who offers the most generous compensation package? Below, let's compare them together.

广汽本田：“N+2+1.8”补偿方案

Layoffs: about 1,700 people

Layoff progress: From May to August, veteran employees rushed to sign up

Positions involved: mainly front-line employees

A few days ago, Guangqi Honda was rumored to lay off 1,700 employees, accounting for 14% of the company's total employees. In the past two days, Guangqi Honda's compensation plan for layoffs has been released, providing "N+2+1.8" compensation plan for departing employees, of which "N+2" is the standard compensation, that is, the number of years of service plus two months' salary, and the additional 1.8 months are paid as bonuses. The layoffs lasted from May to August.

The layoffs mainly involve front-line employees. It is reported that due to the generous compensation, some old employees of Guangqi Honda rushed to sign up and "grab the layoff quota". Among the car companies, the salary of Guangqi Honda's front-line employees ranks in the forefront, reaching a monthly salary of 25,000-30,000 yuan. If an employee has worked for Guangqi Honda for more than 20 years, the compensation can be as high as hundreds of thousands.

There are many veteran employees who want to take advantage of this opportunity to retire directly.

Reasons for layoffs: Lower sales volume and lower capacity utilization

Guangqi Honda's layoffs are due to a decline in sales volume for nearly three consecutive years, resulting in a decline in capacity utilization. According to the data, from 2021 to 2023, Guangqi Honda's cumulative sales decline will expand from 3.17% to 13.66%. This year, Guangqi Honda's situation has not improved, and sales have fallen to about 30,000 units by May, a year-on-year plunge of 41%, and at the same time, sales in the field of new energy have not improved much, and it is in the throes of transformation.

Under such circumstances, Guangqi Honda began to reduce production capacity and personnel size.

Tesla's Shanghai Factory: "N+3" compensation plan

Layoffs: more than 2,000 people

Layoffs in progress: April

Positions involved: front-line employees, sales and other departments

In March and April, Tesla plans to lay off 10% of its workforce globally. Specifically, Tesla's Shanghai factory has 20,000 employees, which means that more than 2,000 people will be laid off.

At first, Tesla's Shanghai factory planned to compensate "N+1". But CEO Elon Musk spoke publicly, "As we restructured Tesla, I noticed some severance packages that were unreasonably low. After that, Tesla China's layoff standard was raised to "N+3", which is better than most car companies.

Employees who were laid off at Tesla's Shanghai factory said that the resignation procedures were handled quickly and the compensation was received efficiently.

Reason for the layoffs: Slowdown in sales growth and increase in productivity to reduce costs.

In the first quarter of this year, Tesla's deliveries fell 8.5% year-on-year to 386,800 units, the first decline in nearly four years, and lower than the market's expectation of 430,000 units. At the same time, the gross profit margin of the automobile sales business further decreased to 15.57%. In order to stabilize the main indicators such as profitability and gross profit margin, Tesla has started global layoffs.

AVATAR: "N+1.5" compensation plan

Reason for layoffs: Shift in sales model

Layoffs Progress: May

AVATR has changed from a direct sales model to a dealer model, and the channel adjustment has come to an end at the end of May this year. For employees under the direct sales system, AVATR provides a treatment plan of "N+1.5" for employees who leave the company and "N+1" for employees who transfer to the dealer system.

The purpose of channel adjustment: channel sinking, expanding sales

GAC Toyota: "N+3" compensation plan

Layoff scale: 1000+

Layoffs in progress: July last year

In July last year, GAC Toyota terminated the agreement with the labor dispatch company and terminated the contract with the "1000 people +" labor dispatch employees. The compensation plan is "severance payment + payment in lieu of notice + thank you payment + advance bonus + additional payment of wages for July 22-31", which is equivalent to the "N+3" level.

Reasons for layoffs: Lower sales volume and lower capacity utilization. Last year, GAC Toyota's sales were 900,000 units, down 7.3% year-on-year. Sales have declined further this year, with cumulative sales in the first five months of 266,000 units, down 27.3% year-on-year. With BYD lowering the price of B-class new energy vehicles to 100,000 yuan, the good days of joint venture brands such as GAC Toyota are gone.

NIO: "N+3" compensation plan

Layoffs: 10%

Layoffs in progress: November last year

At that time, Li Bin, CEO of NIO, issued a letter to all employees who cut 10% of their employees. Some of the laid-off employees said that they received "N+3" compensation, totaling hundreds of thousands of yuan. In order to keep their jobs, some employees borrowed hundreds of thousands of yuan to buy two NIO cars, and they need to repay the car loan of 10,000 yuan every month.

Reasons for layoffs: business adjustments, streamlining positions, and improving efficiency. The key is that the market competition is fierce, and NIO's sales growth is not up to expectations, so reducing staff can reduce expenses.

Other car companies: "N+1" compensation plan

Layoffs: 700~6000 people

Layoff Progress:

In May, FAW-Volkswagen's Foshan plant optimized more than 700 employees whose labor contracts expired, and in addition to providing "N+1" regular compensation, it also issued additional compensation such as special benefits and performance bonuses.

SAIC-GM is rumored to have laid off 30% of its workforce, and the compensation plan is not yet determined. Due to the continuous decline in production and sales, SAIC-GM's capacity utilization rate has dropped to 53%, and it is likely to fall below 50% this year. In the face of such a predicament, in order to reduce costs, it is reported that SAIC-GM plans to lay off employees.

In addition, Volkswagen China executives have signed up for the "KI 10 (KEY initiative) Performance Program", which aims to reduce personnel costs by 20% over the next three years. Although the focus of the project is to improve efficiency and is not the same as layoffs, it will inevitably involve personnel changes. The "KI 10" project covers companies such as Volkswagen China, Audi China and CARIAD, and does not involve joint venture brands such as FAW-Volkswagen and SAIC-Volkswagen.

Due to the poor development, it is reported that Feifan Auto plans to lay off 70% of its employees, of which the high-end intelligent driving team may be laid off as a whole. Even employees who are not laid off in this round will face a pay cut. Feifan Auto's response did not deny the relevant news, saying that it would further deepen its asset-light strategy on the premise of ensuring independent operation.

Another brand is ideally reducing the number of employees as high as 5,600, with an overall optimization ratio of more than 18%, involving multiple departments such as sales and service operations, recruitment, and intelligent driving.

During the shutdown at the beginning of the year, Gaohe Automobile issued a negotiated termination plan to the departing employees, involving three types of payments: economic compensation, payment in lieu of notice and unsettled salary. In addition, if the labor contract is terminated within the specified time (February 29, 2024 to March 1, 2024 at 8 p.m.), another month's salary will be paid in lieu of notice on the basis of the severance payment.

Reasons for layoffs: The same reason is the decline in sales or the growth rate is not up to expectations, resulting in a surplus of employees, but the specific reasons are slightly different. For example, Ideal, because the target for this year is 800,000 units, at the beginning of the year it was very confident that it would achieve its goal, so it was equipped with a corresponding team size. Unexpectedly, the market performance in the first quarter did not meet expectations, and the organizational structure was ideally adjusted, and large-scale layoffs were carried out in order to improve operational efficiency.

Summary: On the whole, the compensation for layoffs of joint venture brands is more generous, while Chinese brands are generally "N+1" conventional compensation schemes. As the market competition becomes more and more fierce, resources are increasingly concentrated on the head new energy brands, and the cost reduction of joint venture brands dominated by oil vehicles may continue.

View original image 306K

•