Escalating strains in the world’s most extensive auto market became tangible on Monday when China Toyota Motor’s joint venture (JV) revealed the premature termination of approximately 1,000 dispatch worker contracts. Analysts interpret this issue as a tangible outcome of the brewing auto price war rivalry on this global stage.
Three anonymous workers reported to Reuters that the collaborative entity between Toyota and China’s state-owned Guangzhou Automobile Group (GAC) released these workers during the past weekend, duly compensating them.
The impacted employees, initially engaged by labor service firms, were assigned roles within a factory nestled in the heart of Guangzhou, a bustling city in the south of China.
Responding to inquiries, Guangzhou Toyota Motor Co – the organization representing Toyota’s JV – conveyed that the abrupt dismissal stemmed from recent production outputs. Committing to legal obligations, the firm will extend financial compensation and transparently communicate the rationale behind this decision to those impacted.
Boasting an annual manufacturing capacity of one million vehicles, the GAC Toyota factory engages nearly 19,000 people. Its production line encompasses models like the Camry, Levin, and the electric bZ4X.
Earlier this month, Mitsubishi Motors similarly unveiled plans to trim personnel costs at its own GAC JV, aiming to rejuvenate its financial performance. CEO Takao Kato labeled the Chinese business environment as “severe”, with the production halt on the new Outlander model remaining intact. Details regarding the approach to restructuring remain under negotiation.
This year’s first half saw Japanese brands enduring the sharpest sales contraction among auto manufacturers in China. Their stake in the market dwindled to 14.9% from almost 20% the previous year, as reported by the China Association of Automobile Association. In contrast, the stake held by Chinese brands surged, comprising 53% of all sales.
Despite experiencing a 9% sales decrease during this year’s initial six months, Toyota’s strategy hinged on its electric vehicle (EV) offerings to stimulate sales revival. The company echoed Tesla’s tactics, initiating a price war by slashing the base price for its bZ4X EV by 15% in February. Despite this calculated action, the recent worker layoff underscores that Toyota’s challenges within the Chinese market persist.
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