Automakers are already reportedly building their cars where it’s cheap. Now they are constructing them there to cut costs and compete with China
May 2, 2024 at 12:35 p.m
- According to a Bloomberg report, Stellantis is hiring engineers from Brazil and India for around $53,000 to cut costs
- The corresponding engineer working in the US or Europe would cost the company $150,000 to $200,000
- The strategy focuses on reducing spending to lower vehicle prices and better compete with Chinese automakers
Many car manufacturers already build their cars in other countries and benefit from cheaper labor costs. But now companies like Stellantis are looking abroad for the engineers they need to develop these cars, and they’re hiring them for a fraction of what they would pay an American or European for the same work.
According to a new report, Stellantis currently recruits most of its engineers from countries such as Brazil, India and Morocco to reduce development costs. An engineer from one of these countries may cost as little as $53,000 per year, or possibly even less, compared to the $150,000 to $200,000 cost with benefits of hiring an equivalent worker in the United States or Europe. Bloomberg says.
Related: UAW prepares to strike at Stellantis plant in Michigan over safety concerns
Stellantis and other Western automakers are scrambling to cut costs to better compete with the growing threat of Chinese brands that are beginning to establish a presence around the world. Chinese companies are currently the only ones capable of building an electric vehicle for the same price as a combustion car, and their Western counterparts are betting on next-generation electric platforms and batteries that will help close the gap.
But new, cheaper technologies are only part of the solution to broader cost problems in the Western car market, including a slowdown in demand for electric cars. Staffing cuts, such as the reduction of Stellantis’s U.S. workforce by 400 in March, and changes to the way it hires new employees, will also play a key role. According to the report, the company plans to hire 500 more employees in Brazil to increase its workforce of 4,000 employees there.
“There is always more potential when it comes to cost discipline,” said Natalie Knight, CFO of Stellantis Bloomberg. “We will continue to optimize our labor costs. This is important for both employees and, to a lesser extent, workers.”
But while Stellantis appears to be wary of paying American and European engineers the going rate for their services, it appears to have no intention of outsourcing CEO duties to India, Brazil or Morocco to reduce its salary bill. Boss Carlos Tavares’ 2023 salary package was a whopping $40 million, 56 percent more than his 2022 salary.