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In the face of major economic difficulties due to the coronavirus crisis, the German automotive group has announced a plan to cut 6,000 jobs by the end of the year and the temporary suspension of its cooperation with Daimler in the development of the autonomous car. These decisions are part of its economy programme to cope with the fall in global demand for vehicles and to revive the ailing German car market.
Two decisions resulting from the economic deterioration linked to the Covid-19 crisis.
Affected by the drop in demand and the closure of sales outlets throughout the period of containment, the German car manufacturer had to take a new series of measures to reduce its spending and survive an unprecedented economic crisis.
6,000 job losses in 2020
Against the backdrop of the crisis linked to the novel coronavirus, the German group is therefore preparing to cut its workforce, which at the end of 2019 employed some 126,000 people.
The car manufacturer announced on Friday 19 June that 6,000 jobs will be cut by the end of the year, mainly at German sites. « After the existing flexibility measures, notably short-time working, additional measures are necessary and will mainly concern the German sites, » a spokesman for the group told AFP. « The planned reduction in the number of employees will be achieved through natural fluctuation and voluntary early retirement ».
In addition, 40-hour contracts will be increased to 38 hours and some employees will be able to choose to receive an additional eight days off by renouncing a portion of their salary.
Finally, the German company is considering not renewing the contracts of the 10,000 temporary workers it used to employ.
Drastic measures, although Personnel Director Ilka Horstmeier assured that the group would try to « find a solution in a constructive dialogue with staff representatives ».
BMW had already announced at the beginning of May that it would be stepping up its savings programme in response to the economic deterioration, with, in particular, a drop in investment and a reduction in the number of jobs.
But the European car market collapsed by a further 52.3% in May over one year and over the first five months of the year, the fall in the European market caused by the closure of automotive dealerships in the spring reached 41.5%.
Like its competitors Volkswagen and Daimler, the Munich-based company then expects an even higher operating loss in the second quarter and taxable income that is ultimately « significantly lower »than in 2019.
Temporary” suspension of its cooperation with Daimler
The coronavirus also got the better of the manufacturer’s ambitions in the autonomous car: BMW thus announced on Friday that it had temporarily suspended its cooperation with Daimler (Mercedes) for the development of a new generation technology for automated driving.
Anxious to catch up with the American and Chinese giants of the autonomous car, the two German rivals signed a « strategic and long-term » cooperation agreement at the beginning of 2019, covering in particular autonomous driving on motorways and parking.
The BMW Group and Mercedes-Benz AG had since then been working separately and had made major progress in this area, including the creation of a joint technology platform to develop the « next generation of autonomous vehicles ».
Victims of the pandemic, both groups felt that given the current economic and trade conditions, and especially the « significant investment required » that this agreement implied, the time was not right for the successful implementation of such cooperation.
However, this joint project may be « restarted later » and the two groups will continue their work in this field with their current partners such as Intel, Fiat and Mobileye on the BMW side, or Bosch on the Daimler side.
It should be remembered that the German automotive sector was already in bad shape before the pandemic, faced with a downturn in the world market and engaged in a costly shift towards electric cars under pressure from strict European CO2 emission standards threatening manufacturers with heavy fines.
At the beginning of April, Oliver Zipse, the boss of the group, had moreover estimated in a message sent to the employees that « circumstances as serious » as those experienced with the coronavirus crisis could « present an existential danger, even for large groups ».
Featured photo: © BMW
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In the face of major economic difficulties due to the coronavirus crisis, the German automotive group has announced a plan to cut 6,000 jobs by the end of the year and the temporary suspension of its cooperation with Daimler in the development of the autonomous car. These decisions are part of its economy programme to cope with the fall in global demand for vehicles and to revive the ailing German car market.
Two decisions resulting from the economic deterioration linked to the Covid-19 crisis.
Affected by the drop in demand and the closure of sales outlets throughout the period of containment, the German car manufacturer had to take a new series of measures to reduce its spending and survive an unprecedented economic crisis.
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In the face of major economic difficulties due to the coronavirus crisis, the German automotive group has announced a plan to cut 6,000 jobs by the end of the year and the temporary suspension of its cooperation with Daimler in the development of the autonomous car. These decisions are part of its economy programme to cope with the fall in global demand for vehicles and to revive the ailing German car market.
Two decisions resulting from the economic deterioration linked to the Covid-19 crisis.
Affected by the drop in demand and the closure of sales outlets throughout the period of containment, the German car manufacturer had to take a new series of measures to reduce its spending and survive an unprecedented economic crisis.
[…]
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