French automotive supplier Forvia planned to cut up to 10,000 jobs in Europe over the next five years, in part through attrition, becoming the latest auto industry player to react to falling demand and China’s dominance, Reuters reported.
The company makes parts for Stellantis, Volkswagen and Ford, and also sells in China, the report said.
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Downbeat statements about the European automotive sector outweighed earlier positive signals about a plan to boost profitability in Europe, an analyst told Reuters.
“Forvia faces concerns from investors due to its strong exposure to a declining European market, accounting for 46% of its total revenue, along with mentions of manufacturing overcapacity in Europe and a changing client base as Chinese EV makers expand in Europe,” he added.
According to Reuters, Forvia said it planned to cut 13% of its European workforce, much of it through attrition.
“Our attrition rate is 2,000 to 2,500 people a year. So, in fact, the plan does not mean making 10,000 people redundant,” CFO Olivier Durand said, adding the company would limit recruitment to posts deemed strictly necessary.
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By GlobalDataThe supplier’s operating profit in Europe, Africa and the Middle East was EUR316m (US$341m) in 2023, less than half of that for Asia at EUR815m. This was despite the region comprising 46% of its sales, compared to 27% in Asia, 21% of which are in China, Reuters said.
Forvia aimed to return to its pre-pandemic operating margin of 7% in Europe, compared to 2.5% last year, supported by annual savings of EUR500m from 2028.
Asia reported an operating margin of 11% for last year, with a double digit margin in China, and forecast 2024 sales of EUR27.5-EUR28.5bn versus EUR27.25bn in 2023, Reuters reported.
