Record profits yesterday, massive layoffs today: the automobile industry in crisis

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The pandemic will have marked our lives considerably, in addition to the social and medical impact of such a tragedy, the global economy has been turned upside down. Among the few (rare) winners of this period, we find the car manufacturers. During these very complicated months, stocks were at their lowest, allowing brands to inflate prices, but since then, the situation has completely reversed.

If the sales figures are no longer as good, things seem even more complicated, with the elimination of thousands of jobs at several leading manufacturers. This is particularly the case for Nissan. The Japanese brand laid off nearly 9,000 people at the end of the year.

In Europe, too, nothing is going well. The legendary Volkswagen group is reportedly about to close factories in Germany, a first in its century-old history. In France, it is the conglomerate Stellantis that is causing concern, with the recent resignation of the group's CEO.

In the United States, Ford has announced the voluntary departure of 4,000 workers, mainly from its factories in Great Britain and Germany, thus “saving” jobs in the United States. Finally, at Renault, jobs are threatened, but no decision has been taken by the brand.

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Identical symptoms

While times are tough for car manufacturers, the sources of this evil all seem to have their roots in the same place. The transition to electric vehicles has put a sudden stop to the sales figures of several manufacturers.

The best example of this is undoubtedly Fiat. The Italian brand launched an electric version of its legendary Fiat 500. A few weeks ago it was withdrawn from sale, in favor of a thermal version. Consumers did not want it.

Too few buyers

For several specialists, the current crisis in the automotive world is not directly linked to this transition. At least, it did not start after the pandemic, but well before. The year 2020 will have been only a euphoric breath in a very complicated period.

Faced with a lack of production, limited by the pandemic and the shortage of semiconductors that followed, manufacturers have regained control of the market. But today, stocks are far too high, and there are too many brands.

Fewer and fewer people are buying cars, especially new ones, so the market is completely unbalanced. Supply far exceeds demand, putting car manufacturers in difficulty. The arrival of new players, particularly Chinese ones, who offer models at knockdown prices, is unlikely to improve the situation.

For Simon Croom, a professor at the University of San Diego, large firms are no longer able to achieve a “decent return” on their factories and machines. This has a “massive” impact on the profitability of the final product.

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