The industry has announced 19,802 in workforce reductions this year through April. That’s more than triple — up 207% — than the 6,451 jobs cuts announced during the same time last year, and the most for the first four months of a year since 101,036 cuts were announced through April of 2009, according to data provided by Challenger, Gray & Christmas.
Both Chrysler and General Motors filed for bankruptcy in 2009, Chrysler in April and GM in June.
Add to that Ford Motor Co.’s announcement on Monday that it planned to eliminate 10% of its salaried workforce, or about 7,000 jobs, by the end of August, with notifications being sent out on Tuesday. Ford said the move is aimed at reducing its management structure by close to 20%.
“As consumers in the U.S. demand vehicles with lower emissions, more energy efficiency and autonomous driving options, tech companies like Tesla and Google’s parent company, Alphabet, have entered the fray,” said CG&C Vice President Andrew Challenger. “Auto makers, like many companies pivoting to include new technology, must become nimble in order to make decisions as rapidly as the technology evolves.”
Year to date, shares of Ford F, -0.39% have run up 33.7% through afternoon trade Tuesday, General Motors Co. GM, +0.43% gained 11.1% and Fiat Chrysler Automobiles N.V. FCAU, -0.82% lost 8.3%, while the S&P 500 index SPX, +0.85% has rallied 14.4% and the Dow Jones Industrial Average DJIA, +0.77% has advanced 11.0%.
Tesla’s stock TSLA, -0.14% has tumbled 38.2% this year while Alphabet Inc. shares GOOGL, +0.85% have gained 10.6%.
Auto suppliers are feeling the “trickle-down effect” of the auto makers’ cuts, as well as the pinch from the U.S.-China trade war, as CG&C has tracked 859 announced layoffs from suppliers since December 2018.
“When auto makers announce job cuts, especially if they include plant closings or the end of production of a certain type of vehicle, a trickle-down effect occurs as supplies lose contracts,” Challenger said. “Jobs cuts in this sector are likely to continue, especially with the implementation of additional tariffs on Chinese goods,” Challenger said.
FactSet, MarketWatchHere are the number of announced job cuts per month since 2014, followed by the number of annual cuts the previous seven.
| Announced automotive job cuts | ||||||
| Month | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 |
| January | 3,949 | 703 | 3,365 | 1,238 | 120 | 1,290 |
| February | 3,100 | 1,375 | 643 | 2,800 | 72 | 518 |
| March | 8,838 | 2,468 | 1,293 | 708 | 1,446 | 795 |
| April | 3,915 | 1,905 | 3,424 | 1,706 | 3,043 | 1,243 |
| May | 454 | 1,671 | 677 | 1,445 | 959 | |
| June | 4,260 | 2,174 | 1,252 | 700 | 862 | |
| July | 531 | 951 | 480 | 423 | 88 | |
| August | 654 | 1,684 | 1,296 | 1,528 | 725 | |
| September | 1,613 | 1,026 | 775 | 3,180 | 268 | |
| October | 526 | 60 | 1,104 | 1,049 | 237 | |
| November | 14,040 | 1,101 | 2,542 | 1,463 | 858 | |
| December | 2,058 | 129 | 4,705 | 1,966 | 3,189 | |
| Total | 19,802 | 30,587 | 17,521 | 19,283 | 16,435 | 11,032 |
| Challenger, Gray & Christmas Inc. | ||||||
Annual auto job cuts (source: Challenger, Gray & Christmas Inc.)
2013: 13,497
2012: 24,092
2011: 10,593
2010: 16,001
2009: 174,192
2008: 127,281
2007: 78,880
The First Trust NASDAQ Global Auto Index Fund (CARZ) was unchanged in after-hours trading Tuesday. Year-to-date, CARZ has declined -24.16%, versus a 7.79% rise in the benchmark S&P 500 index during the same period.
CARZ currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #33 of 41 ETFs in the Consumer-Focused ETFs category.
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