In Europe, politicians and experts are warning that Chinese car brands will soon take market share from domestic manufacturers. But other news is coming from China: According to insiders, the largest Chinese car manufacturer Saic wants to cut thousands of jobs at its joint ventures – so-called joint ventures – with Volkswagen and General Motors. This was reported by the Reuters news agency.
Accordingly, it should be ten percent in the joint venture with VW and even 30 percent in the joint venture with GM. The parent company wants to cut more than half of the jobs at the small, up-and-coming electric car brand Rising Auto. Saic and VW immediately denied the report. But the news represents a change in the car world that can no longer be stopped.
The Shanghai state-owned company has been building cars together with Volkswagen for 40 years. It was the first of now three joint ventures with state-owned companies that build and sell cars for the Wolfsburg-based company in China. For decades it was a lucrative deal: VW provided the technology, the state-owned companies provided the production and the profits were shared fraternally.
The joint ventures are also under pressure
The joint venture built the Santana, which dominated the image of taxis in Chinese cities for a long time. Saic is also the majority shareholder in the controversial VW plant in Xinjiang. Thanks in part to partnerships with VW and GM, Saic has been China’s largest car manufacturer for 18 years, currently producing around five million vehicles.
But in the 2000s, the Chinese government decided to massively promote the construction of electric cars. The foreign car manufacturers initially watched idly. It was only in the last few years that they woke up when electric cars increasingly took away their market share.
With the decline in combustion cars in China, joint ventures are also under pressure. While the Saic joint venture with the Germans sold over two million VWs, Audis and Jettas (its own brand in China) in 2018, last year it was only around 1.2 million. In the joint venture with the US manufacturer GM, the decline was even sharper: from almost two million to one million. The joint ventures were hardly able to benefit from the boom in electric cars. Domestic competitors such as the private company BYD and the US electric car manufacturer Tesla dominate there.
The most successful Chinese car manufacturer abroad: Saic
But even if state-owned companies are lagging behind in the electronic sector, Saic has not been idle. With MG, one of the most successful Chinese electric car brands in Europe belongs to the group. The market share is still manageable, but the partner from the Far East is increasingly becoming a competitor for the Germans on the home market. With 1.2 million exports, Saic was the most successful Chinese car manufacturer abroad last year.
In January, the company’s first car freighter “Saic Anji Sincerity” set off for Europe. On board: 3,700 cars that are also intended for the German market. Around a dozen more freighters are expected to be added by 2026. In view of the threat of EU punitive tariffs on car imports, the Shanghai-based company is already looking for a location for its own factory in Europe.
But the truth is that most electric car manufacturers in China are not having an easy time of it right now. Since there are still over 90 manufacturers on the market, there is massive overcapacity. Some are just starting to sell, like the electronics company Xiaomi. Many manufacturers try to gain market share with massive discounts, but very few are profitable. The Rising Car, for example, was only made its own brand in 2021, but it already beat Audi in German innovation rankings.
However, building new brands is expensive and Saic’s sales figures have recently been declining. Savings programs have been discussed for months. So it wouldn’t be surprising if some of the young electric brands like Rising Auto were absorbed into the overall conglomerate again.