Automakers already build cars where it’s cheap, now they’re engineering them there to cut costs and compete with China, reports says
https://www.carscoops.com/author/chris-chilton-cc/
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by Chris Chilton
May 2, 2024 at 12:35
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- Stellantis is hiring engineers from Brazil and India for around $53k to cut costs, a Bloomberg report says
- The equivalent engineer working in the U.S. or Europe would cost the company $150-200k
- Strategy is focused on reducing spend to drive vehicle prices down and better compete with Chinese automakers
Many automakers already build their cars in other countries and take advantage of cheaper labor costs. But now firms like Stellantis are also looking overseas for the engineers needed to develop those car, and they’re hiring them for a fraction of what they’d pay an American or European to do the same job.
A new report claims that Stellantis is now recruiting most of its engineers from places like Brazil, India and Morocco to drive down development costs. An engineer from one of those countries might only cost $53,000 per year, or potentially even less, compared with the $150-200,000 with-benefits cost of hiring the equivalent worker in the U.S. or Europe, Bloomberg says.
Related: UAW Preps Strike At Stellantis’ Michigan Plant Over Safety Concerns
Stellantis and other Western automakers are battling to cuts costs to better compete with growing threat posed by Chinese brands, which are starting to make their presence felt around the world. Chinese firms are currently the only ones capable of building an EV for the same price as a combustion car, and their Western counterparts are banking on next-generation electric platforms and batteries helping to close the gap.
But new, cheaper, tech is only part of the solution to wider cost-related problems in the Western car market including a slowdown in demand for electric cars. Headcount cuts, like the 400-strong reduction in its U.S. workforce Stellantis made in March, and changing the way new employees are sourced, will also play key roles. The company plans to hire 500 more staff in Brazil to add to the roster of 4,000 it already has there, the report says.
“There is always more potential when it comes to cost discipline,” Stellantis CFO Natalie Knight told Bloomberg. “We are going to continue to optimize our labor costs. This is something that has been important both on the white-collar and, to a lesser extent, on the blue-collar side.”
But while Stellantis seems to be baulking at paying American and European engineers the going rate for their services, it seems to have no intention of outsourcing CEO duties to India, Brazil or Morocco to slash its salary bill. Boss Carlos Tavares’s 2023 pay package was a mammoth $40 million, up 56 percent on his renumeration for 2022.
