Recently, an internal letter from Li Bin, Chairman and CEO of NIO Automobile, partially confirmed the previously circulated news in the industry that NIO will lay off 10% -20% of employees. In this letter from all employees, Li Bin proposed that the company will reduce the number of positions by about 10%, and the specific adjustments will be completed in November.
The Securities Daily reporter learned that Li Bin reiterated in his internal staff letter the need to carry out adjustments related to organizational and resource investment directions, and proposed "two efficiency improvements" and "three guarantees".
This optimization and adjustment is mainly aimed at the headquarters, and there will be no significant changes in the terminal. On November 5th, an insider from NIO Automobile told reporters that the main purpose of personnel optimization and adjustment is to reduce costs and increase efficiency to cope with increasingly fierce market competition.
In fact, at present, the new forces of car manufacturing have completed the transformation from "nascent" to "running", among which "Wei Xiaoli" has been established for over 8 years. It is widely believed in the industry that these less new "new forces" urgently need to optimize and adjust their organizational models.
Request personnel reduction and resource efficiency improvement
According to the entire staff letter, "two efficiency improvements" include organizational efficiency improvement and resource efficiency improvement. Organizational efficiency improvement will merge duplicate departments and positions, transform inefficient internal workflow and division of labor, and eliminate inefficient positions; Resource efficiency improvement will delay and reduce investment in projects that cannot improve the company's financial performance within 3 years. This ensures the long-term competitiveness of the company.
As early as January of this year, Li Bin mentioned in a letter from all staff that the team would be streamlined. "In 2022, the team will continue to expand, but there are many situations where responsibilities are unclear, goals are inconsistent, processes are incomplete, and repetitive construction is common. There is still great room for efficiency improvement." At that time, Li Bin stated that as long as he can provide wages, it is easy to avoid layoffs.
However, the cumbersome personnel size has become a heavy burden for NIO to participate in market competition and achieve turnaround. According to the 2022 financial report data, NIO currently has 26800 employees and a salary scale of over 11.2 billion yuan. In addition, in terms of sales and administrative expenses, NIO Automobile's expenses in the first half of this year have reached 5.3 billion yuan.
A person close to NIO Automotive told reporters that the changes in NIO this time involve organizational adjustments and resource investment direction adjustments, with the aim of improving organizational and resource efficiency. Over the past period of time, NIO has experienced rapid expansion in scale and a significant increase in the number of employees. Excessive organizational expansion has to some extent resulted in a decrease in human efficiency. At this time, NIO has made organizational adjustments aimed at maintaining healthy organizational mobility
The most crucial thing is that the huge personnel expenses have not achieved the expected results, and the weak performance of NIO's main business may be the main reason why Li Bin is determined to press the reform button.
In June this year, NIO announced a price reduction of 30000 yuan for all new models in the series. Affected by this favorable situation, NIO delivered over 20000 vehicles in July. With the support of 8 models on sale, NIO has set a monthly sales target of over 20000 vehicles. However, the latest data shows that NIO delivered only 16074 vehicles in October, and due to the lack of popular models, NIO was unable to achieve its established monthly sales target.
At present, many industries, including automobiles, are emphasizing rational development, and organizational optimization in industries such as technology, the internet, and automobiles has become the norm. Organizational optimization is more urgent and necessary for the new forces in the automotive industry, which are facing high financial pressure and fierce market competition at this stage. Cost reduction and efficiency increase have become the trend, "said Gao Chao, a researcher at the China Autonomous Driving Industry Innovation Alliance.
All 'Wei Xiaoli' have initiated organizational optimization
In the letter from the entire staff, Li Bin not only mentioned the streamlining of the team, but also proposed three "guarantees", namely ensuring long-term investment in core key technologies and maintaining leading advantages in technology and products; Ensure sales and service capabilities are able to cope with fierce market competition; Ensure the timely launch of 9 core products from 3 brands. This is the first time NIO has disclosed its brand product planning to the public.
According to the information disclosed by NIO, over the past two months, the company has conducted more than 30 two-year business plan analysis and discussion meetings to determine the goals, key success factors and priorities, action plans, and required resources for each business in the next two years, identify opportunities for organizational optimization, cost reduction, and efficiency improvement, and determine the business priorities for the "three guarantees" mentioned above in the past two weeks.
For the improvement of sales, NIO has proposed to expand its sales service network to ensure that orders will not be lost. At the 2023 second quarter financial report, Li Bin told Securities Daily reporters that channel sinking is still an urgent task, and the next step is for NIO Automobile to further increase sales personnel - starting from July to comprehensively improve sales capacity, and completing the construction of this sales capacity by the end of September, which will show results starting from October.
In fact, NIO Automobile is not the first new car making force to choose to improve organizational efficiency in response to the survival test. Starting from 2022, Xiaopeng Automobile took the lead in initiating organizational and personnel reform. 2022 provides us with a great opportunity for reflection and time to make stable and orderly adjustments. The company has reconsidered its plans for the next five years and will continue to adjust its organizational system this year. "Xiaopeng Automobile Chairman He Xiaopeng once said that when the company's personnel size increases by more than ten times, the management difficulty has actually increased by tens of times. If you remain unchanged, the company will be gone. Starting from 2023, Xiaopeng Motors will reduce the number of SKUs in its future products, striving to achieve a positive operating profit by 2025 and a sales volume of 1.2 million vehicles by 2027. As the current sales leader in the new forces, Ideal Automobile has chosen to actively embrace the matrix organizational model and initiated a transformation in the collaborative capabilities of product research and development, supply chain, production and sales, and service organizations.