By CHEN Xiaotong, ZHANG Mingrui, ZHOU Shuqi

China’s car market has been as weak as anyone can remember this year, and it’s not all about price wars. There was a noticeable inventory backlog that had to be cleared and the entire industry chain has reduced production?to clear out factory parking lots.

The EV?business is moving very fast, both in vehicle development and business models. According to reports, a large number of workers at BYD factories in Changsha have quit due to reduced hours and lower wages.

No work in the workshops

There is apparently a backlog, not of outdated SUVs, but of BYD production line workers waiting to ditch their jobs. Some of the departing employees have said, “This month’s quota for resignations is full.”

In response to inquiries by Jiemian News, BYD denied that there is a “resignation quota” or “resignation queue.” Indeed, recruitment is ongoing in Changsha.

One employee said that there has been little activity in the workshops this year, and they are able to leave work on time at 8 pm. Last year, she usually worked a couple of extra hours during busy times.

“There is no work in the workshops, and the factory wants workers to leave as soon as possible. And because of low wages and expensive canteens, many have already left,” she said.

Depending on their skill level, the monthly salary of workers at BYD’s Changsha factory can reach 8,000 yuan (US$1,185.85), but only through overtime. An ordinary operator earns a basic salary of 3,200 yuan without overtime pay. The average salary in Changsha in Q4 2022 was 9,951 yuan.

Wave of resignations

ZHOU?Qin is in charge of recruiting for the Changsha BYD factory. She confirmed a “wave” of resignations since March this year. There has been a sharp drop in orders and she has stopped hiring workers.

Due to the canceled orders, workers lost their overtime and performance-related pay. Their monthly income collapsed to a third of the normal rate. As a result, some chose to leave, mostly relatively young.

Zhou emphasized that is no “resignation quota.” All that is required is a week’s notice.

The decrease in production is inseparable from market conditions.

Subsidies for new energy vehicles ended In Q1 so a lot of cars were bought at the end of last year.?Coupled with the “vicious cycle” of the industry’s price war, consumers’ “wait-and-see” attitude resulted in significant pressure on the overall automotive market in the first quarter.

Whole-chain snarl up

BYD sales in the first quarter of this year were about 550,000, down by a fifth from the previous quarter. Only one-quarter of this year’s annual sales target of 3 million vehicles was achieved in one-third of the time.

Excess capacity has always existed, but mainly in fuel vehicle companies. However, this year it has also had an impact on EVs. Capacity has expanded significantly compared with last year, including the upstream battery industry chain. “Slow” (22 percent) growth at the beginning of this year has snarled up the entire industry chain.?Last year, the year-on-year growth reached 90 percent.

ZHANGJunyi, the managing partner of Oliver Wyman, believes that if demand doesn’t pick up in the second half of the year, competition will become ever more brutal. Demand depends on consumer confidence, policy support and stable price expectations. Increased competition in the domestic market will prompt automakers?to actively look overseas.

Back to normal

This month, BYD’s orders have returned to normal, and there is a shortage of workers. All operations in the two factories now require workers, and the recruitment bar has been lowered, allowing people without factory work experience to apply.

“BYD tells our department to speed up recruitment every day,” Zhou said.