Forvia to Cut 10,000 Jobs to Better Compete in EV Transition

Monica Raymunt and Wilfried Eckl-Dorna, Bloomberg News

A battery platform at the booth of Forvia during the International Motor Show IAA in Munich. Photographer: Tobias Schuwarz/AFP/Getty Images , Photographer: TOBIAS SCHWARZ/AFP

(Bloomberg) -- Auto-parts supplier Forvia SE is poised to cut roughly 13% of its European workforce over the next five years, with plans to tap artificial intelligence to better compete with Asian rivals in the shift to electric cars.

The French company’s effort to slim down by about 10,000 jobs includes changes to regional manufacturing and spending on research and development, Chief Executive Officer Patrick Koller said Monday. This would improve profit margins and keep pace with the industry’s fundamental changes, he said.

The stock fell 13% in Paris after analysts questioned Forvia’s prospects in China, where suppliers face increasing challenges in the EV market. The shares have lost 31% since the start of the year.

The share drop highlights the “the uncertain outlook for suppliers in China and any strong dependency on the region,” Bloomberg Intelligence analyst Gillian Davis said in a note. As more than 45% of Forvia’s earnings before interest and taxes come from Asia, consolidation in the Chinese EV market would hurt the French supplier.

Carmakers and suppliers are recalibrating EV strategies amid reduced incentives and high vehicle prices, while overall goals in the shift remain intact. Last week, German parts maker Continental AG finalized plans to cut more than 7,000 positions at its auto unit as well as a push to pool sites in Germany and elsewhere to save costs.

Forvia, which since 2022 comprises French supplier Faurecia and German lighting and electronics maker Hella, plans to use artificial intelligence to optimize spending on development. The company will rely on natural attrition to reduce overcapacity in Europe, according to a statement, while reducing its dependence on China for profits.

The company is targeting savings of around €500 million ($539 million) on an annual basis in 2028, to help lift margins to more than 7% of sales from 2.5% last year.

For 2024, Forvia expects sales of as much as €28.5 billion with an operating margin between 5.6% and 6.4%, based on “broadly stable” automotive production.

Forvia employed roughly 75,500 workers at the end of last year.

Read More: Continental to Cut 7,150 Jobs in Savings Push at Auto Unit

(Adds share price move in third, analyst comment in fourth paragraphs.)