Global automotive companies are undergoing significant restructuring due to a combination of factors including domestic market slowdown, protective tariffs, electrification transitions, and the ongoing conflict in the Middle East. These companies are cutting jobs, closing factories, and reducing non-core operations to free up cash for investments in future mobility, such as electrification and software-defined vehicles (SDVs). In contrast, South Korea is criticized for ignoring industrial structural changes and being mired in collective self-interest, focusing instead on outdated demands like extending retirement age and reinstating laid-off workers.
According to industry sources, the global automotive sector is in the midst of extensive restructuring. The Volkswagen Group recently held a board meeting and decided to cut over 100,000 jobs, which represents 15% of its global workforce of 657,000. This marks the largest job reduction in automotive history, surpassing General Motors' 74,000 job cuts in 1991. Volkswagen also announced plans to close four factories in Germany and reduce its entire vehicle model lineup by up to 50%.
Honda, one of Japan's three major automotive groups, is also tightening its restructuring efforts. After reporting a loss of approximately 690 billion yen (about $6.4 billion) last year, Honda announced its withdrawal from the South Korean automotive market as part of its business reorganization. The company plans to close one factory operated jointly with Guangzhou Automobile Group (GAC) within the year and is expected to halt operations at its joint venture with Dongfeng Motor Group next year.
Other companies like Volvo, Mercedes-Benz, and Audi are also facing job cuts. Volvo has reduced its workforce by about 3,000, or 7% of its total 43,800 employees, and has implemented additional cuts at its factories in Virginia and Pennsylvania. Mercedes-Benz aims to reduce costs by about 20% through workforce reductions and relocating production sites by 2027, while Audi plans to cut approximately 7,500 jobs by 2029.
In South Korea, a different scenario is unfolding as the summer strike season begins. This year's wage and collective bargaining negotiations have intensified labor disputes, focusing on demands for retirement age extensions, wage increases, and opposition to AI humanoids. This contrasts sharply with the fierce competition among global automakers to transition to electrification, SDVs, and AI integration. There are concerns that the rising risk of strikes could severely impact South Korea's strategic value amid the ongoing global restructuring of automotive supply chains.
Indeed, companies like Hyundai, GM Korea, and Renault Korea have responded to increasing strike intensity by reallocating new vehicle production to overseas plants. An industry insider noted, "The strong labor unions in Korea create a significant risk that compels companies to consider building factories abroad, even at a higher cost, which undermines the advantages of Just-In-Time production and the 'anti-China' block strategy."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.