Chery Automobile Co. Ltd. said yesterday it was planning to cut its labor force in response to the slumping automotive industry.

The nation's fourth biggest car maker became the latest car manufacturer to reduce jobs and suspend production after the world's second largest auto market also fell victim to the global financial crisis that has caused a major slowdown in sales.

Toyota Motor Corp., Chang'an Ford Mazda Automobile Co. Ltd. and Dongfeng Peugeot Citroen Co. Ltd. have all taken action.

Jin Yibo, Chery assistant general manager, said yesterday that the company would cut jobs for interns and short-term contractors. The company did not disclose how many staff members it would lay off.

The statement was made after media reports said Wuhu, Anhui Province-based Chery was considering cutting its head count by 30 percent, including more than 6,000 interns and provisional employees after sales posted a sharp decline. The home-grown vehicle specialist has around 20,000 employees.

"Chery's sales have been hurt by both weak demand on the domestic market as well as dropping exports because of the financial crisis," said Jia Xinguang, former chief analyst from China Association of Automobile Manufacturers.

Chery's sales tumbled 47 percent to 17,997 units in September, outpacing the 1.44-percent dip for overall passenger car sales. Third-quarter sales also slid 12 percent to 221,196 units from the same period of last year, according to CAAM.

Jin said the move was among a raft of measures Chery had taken to meet the current challenges in the industry, but the car maker remained confident about next year and said it planned to launch new models soon.

China's passenger car sales posted a year-on-year decline in August and September for the first time in three years, dragged down by high inflation and soaring fuel prices.

The flagging stock market, influenced by the global financial crisis, and the gloomy economic outlook also further restrained vehicle purchases despite lower prices offered by car makers in the hope of boosting sales.

Besides Chery, Toyota Motor Corp. has also suspended production in its manufacturing facility in Guangzhou while Chang'an Ford Mazda Automobile Co. Ltd. stopped contracts with temporary workers. Dongfeng Peugeot Citroen Co. Ltd., which makes Peugeot 307 and Citroen-branded vehicles, has planned to cut nearly 1,000 jobs.

(Shanghai Daily October 31, 2008)