China’s largest vehicle manufacturing group, SAIC Motor, plans to cut thousands of jobs this year as the sprawling state owned automaker struggles to keep up with the fast evolving domestic market, according to a Reuters report citing “people with knowledge of the matter”.

SAIC Motor, including its joint ventures with General Motors (GM) and Volkswagen, reported a 5% drop in sales worldwide to five million vehicles last year while overall China home market sales and exports rose 12% to 30m.

The domestic market had become extremely competitive with local manufacturers offering deep discounts while more brands and models were entering the electric vehicle (EV) segment.

The report suggested the automaker would not announce a single mass layoff event but instead would likely make ongoing redundancies over the year as part of an ongoing efficiency drive by introducing stricter performance targets and offering incentives to workers choosing to resign.

An SAIC Motor spokesman described the reports as just “speculation”, however, adding the company would not “set targets” for worker redundancies. The company said it had recruited 2,000 new workers in the first two months of 2024 to strengthen its software and new energy vehicle operations.

The report suggested the biggest cuts, of 30% of the workforce, were planned at SAIC-GM, the JV with General Motors which reported a 14% sales decline to 1m units last year. That compared with sales of 1.6m in 2019.

The report also suggested the SAIC-Volkswagen JV was planning to cut 10% of its workforce while half the headcount at the SAIC Rising Auto EV subsidiary would also be cut.