"For management, a pay cut may just reduce the quality of life, but for the average employee, a pay cut loses life." Under the news of a collective pay cut in the automobile industry, a netizen on Weibo commented.

In the best golden age, an ordinary front-line employee of an automobile enterprise can get 30 months' salary a year, but now, the automobile industry has entered a "Depression era".

On the afternoon of March 12, data released by the China Automobile Industry Association showed that in February this year, the production and sales of automobiles were 285000 and 310000 respectively, with a month on month and year-on-year decline of nearly 80%.

The market howled at the low sales.

"It's the hard time for our auto industry." Xu Heyi, chairman of BAIC group, once said so.

The right posture for car companies to cut wages and spend the winter?

The car market is getting colder / pexels

01 adjustment under heavy pressure

As one of the "most profitable auto groups", SAIC's subsidiaries started to adjust first.

On March 5, SAIC Maxus internally issued a statement on salary and welfare adjustment in 2020. Its annual leave subsidy was cancelled for all employees, and the first-line full-time service award was transferred to the production struggle award, which was timely distributed according to the production and sales arrangements.

"The salary adjustment is SAIC Maxus' response to the market, which will be carried out every year." SAIC Maxus replied to yiou. As a wholly-owned subsidiary of SAIC Group, SAIC Maxus was born in 2011 with the golden key. Now it also has to be responsible for its own profits and losses and link the operation with the employee compensation. However, chase said that the circulated salary adjustment information was only used for consultation between enterprises and labor unions and employees, and no final plan had been formed.

After that, SAIC began to cut wages. According to the surging news report, SAIC's passenger car employees said, "the performance bonus will be reduced from March to June, ranging from 100% to 75%, depending on the rank and operation."

"Salary adjustment is a measure to maintain competitiveness in a special period," SAIC passenger vehicle related people told yiou auto, which is a timely adjustment made by the enterprise according to external changes, "in order to ensure that the interests of the enterprise and employees are highly consistent.". In addition, in December last year, SAIC Huizhong automobile signed a pre tax salary reduction agreement of 22.2% with its employees.

The right posture for car companies to cut wages and spend the winter?

Tabulator / Hao Qiuhui, auto analyst of yiou

In 2019, SAIC Group's sales performance of 6.238 million continued to rank first in China's automobile enterprises, but its sales volume dropped by 11.5%, higher than the industry average of 9%. The net profit attributable to shareholders of listed companies is expected to be 25.6 billion yuan, about 10.4 billion yuan less than last year, 28.9% less than last year. The impact of the epidemic once again poured cold water on the car companies in the cold winter. In the first two months of this year, China's auto production and sales dropped by more than 40% year on year. In the same period, SAIC Group sold 447600 vehicles, a year-on-year decrease of 54.1%; BAIC group's cumulative sales of new energy only exceeded 3000 vehicles, a year-on-year decrease of 59.2%.

The right posture for car companies to cut wages and spend the winter?

Tabulator / Hao Qiuhui, auto analyst of yiou

Under the cover of a nest, there is no end. The decline of sales volume and the decrease of operating profit increase the operating pressure of SAIC and BAIC. Pay cuts have become one of the cost cutting measures it has to take.

"Wage reduction is a major trend in the industry, and we can understand it." An employee of SAIC said to yiou automobile.

"The market environment is becoming more and more arduous. We have taken the time to return to work and production, encouraged all staff marketing innovation, and made great efforts to resume normal operation." SAIC Maxus insiders told yiou auto that "the impact of China's car companies' wage cuts depends on the actual situation of each company. The current situation is relatively complex, so it's not advisable to make an early judgment, and we should wait until the end of the epidemic to make a judgment."

As a listed company, SAIC Group should pay attention to the reasonable return on investment to investors, and take into account the sustainable development of the company. Salary reduction is also an expedient way to ensure the operation of the enterprise and the interests of shareholders.

The right posture for car companies to cut wages and spend the winter?

Rongwei Marvel X / SAIC official

02 more stringent policies

Life is not easy for BAIC group.

In 2019, BAIC group sold 2.26 million complete vehicles, down 5.91% compared with that in 2018, while BAIC new energy's sales fell 4.69% higher than the industry as a whole. After the adjustment of SAIC Group's enterprises, BAIC also began to adjust its wages. On March 10, the media "yuguanche city" reported and disclosed some contents of the "retail center sales assessment plan for all staff" issued by BAIC Marketing Business Committee. According to the performance appraisal plan, which is regarded as the most stringent assignment in the history of BAIC, the relevant personnel in four positions, including the deputy general manager in charge of relevant business units, the director of business units, the section chief of business units and the director of the region, will face the punishment of dismissal if they fail to complete the wholesale task in March.

The right posture for car companies to cut wages and spend the winter?

The exposed BAIC retail center sales volume assessment plan / happy car market

At the same time, it includes the deputy general manager in charge of the retail center, the deputy general manager in charge of the sales department, the regional manager, other relevant personnel in the back office of the business unit and all the members of the sales department, all of which will be paid according to the amount of tasks completed. Employees who fail to complete the overall wholesale task in March will be deducted 20% to 70% of the overall monthly salary.

Now the more violent cold wave is coming, many BAIC employees have some doubts about the "retail center sales assessment plan for all staff". More than one BAIC employee once told the "happy view auto market" that there was a "disguised layoff" doubt when such a rigorous assessment method was formulated during the epidemic.

"It's true that there are not a small number of enterprises that have adjusted their salaries and reduced their salaries this year. We are not unwilling to take risks with the enterprises, but we will be dismissed if we fail to accomplish the task. Isn't that equivalent to layoffs in disguise?"

The insiders said that they were not worried about "removing the post if they can't complete the task", but because of the following two points: the performance goal of March formulated under the epidemic is extremely high, and the probability of failure is very high; in addition, while general enterprises formulate punishment policies, they will also formulate reward policies for over completing the task, but this assessment can't be seen.

The right posture for car companies to cut wages and spend the winter?

BAIC / BAIC official

The performance appraisal formulated by BAIC mainly focuses on the batch sales volume. According to the general logic, if you want to complete the task, just press the goods into the hands of the dealer. In today's market environment, it's not easy for BAIC to let dealers pick up the order.

As of the end of February, the inventory warning index of domestic dealers has reached 81.2%, according to the China Automobile Circulation Association. At present, the sales efficiency of dealers is only 24.9%, and the after-sales efficiency is only 31.1%.

In addition to the sales volume, dealers also face the problem of overstocking. This will make it difficult for dealers to collect funds, and the pressure on funds will continue to increase. At the same time, due to the decrease of consumer travel, the situation of many car owners coming to the store for maintenance will be greatly reduced, which will make the operation of dealers more difficult.

In this case, there is great resistance at the dealer level.

In the view of some insiders, the core reason for the decline of BAIC's sales volume is not that the marketing level is not hard, but that the product level is difficult to meet consumer demand. What BAIC needs to do now is not only to "cure the symptoms", but also to "cure the root causes".

The right posture for car companies to cut wages and spend the winter?

03 what's worse is layoffs

Pay cuts are not a scary thing, "layoffs are." LU Hong, an engineer at SAIC, told yiou.

Compared with the salary reduction of domestic automobile groups, many large multinational automobile enterprises have launched layoff plans earlier.

In March 2019, Volkswagen announced that it would cut 10% of its management staff and 7000 employees by 2023. Ford closed three factories in a year, cutting about 16000 employees. It is expected that by the end of this year, 13000 employees will be unemployed when it closes six factories. Not long ago, yiou automobile exclusively learned that Daimler may cut 4% of its employees in China, including nearly 100 foreign experts of Beijing Benz.

In the past year, the global automobile industry has laid off more than 100000 people. "There's a big gap between pay cuts and layoffs." LU Hong felt that the two things were far from each other.

Looking at the Chinese market, for the entire automobile industry, "golden age" has passed. The industry downward cycle and technology conversion cycle overlap, so that the pressure on enterprises is constantly amplified. Salary reduction is the strategy for automobile enterprises to spend the cold winter together. When the market recovers, what kind of products and services should be presented to really stimulate consumer demand? This is the common consideration of upstream and downstream automobile enterprises.

The right posture for car companies to cut wages and spend the winter?

In the process of transformation to "new four modernizations", independent brands are facing many challenges.

"Tesla's impact on traditional car companies is too great, and how to meet users' needs, such as product cost performance, is more important." Lu Hong said frankly to yiou automobile. LU Hong believes that the arrival of electrification is to reduce the threshold of car building. Tesla, Weilai, Xiaopeng and other enterprises enter the track, which has an impact on traditional car enterprises. "Originally, there were more than 10000 parts for fuel vehicles, but less than one third for electric vehicles, which means that in the future, electrification and intelligence will replace labor.".

As Xu Heyi said: the great turning point of the automobile industry has come. At present, as the starting period of the era of great adjustment of the steel industry, today's steel industry is the tomorrow of the automobile industry.

The pay cut is releasing a dangerous signal. It is the entire Chinese automobile industry that should be in danger now.