Japanese and American auto giants, including General Motors, have begun laying off more than 70,000 workers, nearly 100,000 after the Lehman crisis. In addition to the drop in new car sales, such as signs of a slowdown, job cuts are also being blamed on car companies pushing ahead with structural changes to a new generation of cars such as electric vehicles. Job cuts in the wider automotive sector, such as parts manufacturers, will cast a shadow over the improvement in the employment environment.
GM will close three u.S. plants, a total of seven around the world and lay off 14,000 workers. Ford motored from the U.S. and Nissan Motor Co. announced 125,000 job cuts in its production division.
The number of employees at major Japanese and U.S. auto companies continued to increase after 2009 to about 2.4 million, but will decline slightly in 2018. The cuts of more than 70,000 this round represent about 4 per cent of the workforce of these car companies.
One background in the job cuts is that new car sales are falling. World new car sales fell 0.5 percent to 95.81 million in 2018 from a year earlier. Some analysts believe that new car sales in developed countries such as Japan, the United States and Europe have peaked, with new car sales expected to fall by 3% in 2019 and 1% in Europe. New car sales in China and India are also expected to fall by more than 5% this year.
The transition to a new generation of cars, such as electric vehicles, will also drive structural reforms in the production system. Electric cars without internal combustion engines have 30% fewer parts than petrol cars, and fewer people are needed to assemble than cars with internal combustion engines.
Volkswagen has proposed to shift 40 percent of global sales to electric cars by 2030, and will cut 7,000 to 8,000 jobs by 2023 as factories in Germany start production of electric cars.