BYD, the well known Chinese vehicle and battery producer, announced it will cut salaries because of lower profits.
Between June and September BYD will cut bonuses by 18%, which means that the total earnings of employees will drop 14% in this period. The company believes that this move will reduce the human resource costs for the Warren Buffett-backed company by around 240 million yuan ($38 million). In 2011 BYD reported a 1.39 billion yuan net profit.
“Because of the downturn in the external and internal economy, performance pay for staff is lowered to 15 percent from 33 percent in the period from June to September. The whole industry is in difficulty, we are not the only one. The payment cut is temporary, we hope things can be better in the fourth quarter,” the company said in an internal document.
After two strong years, the Chinese auto industry slowed down in 2011, bringing challenges for the domestic auto makers. Many auto brands have cut prices due to lower profits: Audi offers a 12% discount for the A1 and A7 models, Lexus reduced prices for some of its models by as much as 46%.