The global automobile industry is reducing its workforce and cutting investments due to declining profits from high tariffs in the United States and lack of demand. Hyundai Motor, which is currently undergoing negotiations with labor unions regarding wages and collective bargaining, has advised the union that it expects a loss of approximately 9 trillion won in the second half of the year and that they must face reality and prepare for the future.
French automobile corporations Renault appointed Duncan Minto as interim CEO on the 16th. This follows the resignation of CEO Luca De Meo, who moved to Kering Group, the parent company of Gucci.
Renault has downgraded its operating profit margin forecast from 7% to 6.5% this year and also lowered its free cash flow estimate from at least 2 billion euros (about 3.2 trillion won) to 1 billion to 1.5 billion euros. Free cash flow is the money left after deducting the amounts invested in operational facilities from the cash flow from a corporation’s operating activities. They have also decided to implement workforce reductions in production and research and development (R&D) as well as support.
The Wall Street Journal (WSJ) reported that Troy Jones, the vice president responsible for North American sales at Tesla, has left the company after 15 years. This is said to be in response to poor sales performance. This comes less than a month after the firing of Omid Afshar, who is close to Tesla CEO Elon Musk and oversees North American and European operations, and Jenna Peruah, the North American human resources director.
Stellantis has decided to halt its hydrogen fuel cell investment that it was carrying out in collaboration with tire manufacturer Michelin and auto parts corporation Fobia. Volvo, a Swedish automobile corporation under China's Geely Group, recently announced plans to cut about 3,000 jobs and stated that they would incur a one-time expense of $1.19 billion (about 1.7 trillion won) due to delays in the launch of some models in the American market and increased development costs.
Global automobile corporations are facing tough times. As demand continues to lag, the situation worsened when the Donald Trump administration imposed a 25% tariff on imported automobiles. The U.S. market accounts for a significant portion of global automobile revenue, but intense competition has made it difficult to pass all tariff costs onto consumer prices. Additionally, the influx of Chinese automobiles, including BYD, is intensifying.
Hyundai Motor and Kia are in a similar situation. According to financial information provider FnGuide, the operating profit of Hyundai Motor and Kia is expected to decrease by 10.8% and 13.7%, respectively, compared to a year ago. The Hyundai Motor-Kia union is demanding increased base wages, performance bonuses, and extended retirement age.
Lee Dong-seock, CEO of Hyundai Motor, reportedly said during the 10th negotiation with the union at the Asan plant on the 15th, “In the second half of the year, a loss of 8 trillion to 9 trillion won is expected, leading to negative growth. Employees need to face reality and prepare for the future.”