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Over 2,000 Honda staff apply for early retirement amid EV shift

That represents 5% of domestic workers as combustion engines lose favor

As Honda moves toward electrification, it is also retiring some of its older staff in favor of younger workers more in tune with new technologies.

TOKYO -- Over 2,000 employees at Honda Motor applied for early retirement, Nikkei learned Thursday, as the Japanese automaker restructures its workforce to gear up to make more electric vehicles.

Honda's move is the latest in the trend among automakers to move away from the production and sales of internal combustion engines.

Those employees account for around 5% of Honda's full-time staff in Japan. The early retirement program is open to those aged between 55 and 63 and offers a package of up to three years' wages on top of retirement pay.

A Honda spokesperson declined to comment.

Honda, which opened the program in April and completed it in July, has reported the application status to its labor union. Although Honda had not set a target, the number of applications has far exceeded its initial estimate of 1,000. It is the first time in about 10 years that Honda has offered an early retirement package. About half of the applicants this time are under 60 and some have already retired at the end of July.

Honda's move is part of plans to reduce reliance on older staff as it speeds up the development of electrification and autonomous driving. In the longer term, the early retirement program will reduce fixed costs and improve profitability as its expenses in research and development increase due to the shift to EVs.

It announced in April that it plans to sell only new EVs and fuel-cell vehicles by 2040. The automaker sees younger workers more in touch with new technologies as a way toward meeting that goal.

Honda is expected to record an extraordinary severance charge of some tens of billions of yen for this fiscal year through March 2022. Despite this, Honda on Wednesday revised up its annual net profit forecast to 670 billion yen ($611 million) for the year ending March 2022, up 2% year-on-year. Although sales are picking up in the U.S. and other markets, the operating profit margin for its mainstay automobile business remained sluggish at 1% in the last fiscal year.

Other automakers are also making the same personnel moves. In 2019, Nissan Motor said it would cut more than 10,000 jobs worldwide by March 2023. As the shift to EVs accelerate around the globe, particularly in Europe and the U.S., automakers are seen restructuring their workforce away from the focus on internal combustion engines.

Honda has been carrying out structural reforms in recent years, such as closing plants in Japan and overseas. At the end of March, Honda and its subsidiaries had 40,000 employees in Japan, excluding temporary workers and part-time workers.

It is expected to open its early retirement program over the next few years, with the ceiling age set at 59.

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