This massive workforce reduction at Audi comes in the aim to save €1 billion in the medium term.
If news of Volkswagen being in dire straits have yet to become apparent to anyone already, Audi has recently added to that rather unfortunate state of affairs by revealing it plans to cut up to 7,500 jobs in Germany by 2029.
Primarily affecting administrative and development positions, this announcement made on Monday by the German automaker marks the latest in a series of workforce reductions across Germany’s automotive sector as manufacturers adapt to changing market conditions.
The restructuring measures, which were agreed upon by both management and labor representatives, aim to generate annual savings of €1 billion (RM 4.85 billion) for the automaker in the medium term. Despite these cuts however, Audi has nevertheless also announced it is committed to investing a whopping €8 billion (RM 38.80 billion) in its German facilities over the next four years, demonstrating its continued commitment to domestic production.
The current planned cuts follow on from Audi’s previous workforce reduction of about 9,500 production jobs since 2019. The previous round of layoffs were supposedly a move that was intended to free up resources for the company’s transition to EVs and improve profit margins to between 9% and 11%.
Audi however has unfortunately struggled financially in recent years, with its operating margin dropping significantly to 4.5% in the first nine months of 2024, down from 7% during the same period the previous year. This decline has been attributed to weak sales in key markets and operational challenges at its Brussels facility. The company is scheduled to release its full-year financial results for 2024 on Tuesday.
This latest round of workforce reductions incidentally brings the total planned layoffs across the wider Volkswagen Group to nearly 48,000 positions. Parent company Volkswagen has previously announced 35,000 job cuts, while Porsche plans to eliminate 3,900 positions, and the software division Cariad aims to reduce its workforce by approximately 1,600 employees.
In a move that may help alleviate concerns among German labor representatives, Audi has announced plans to manufacture a new entry-level electric model at its Ingolstadt plant and is considering producing an additional model at its Neckarsulm facility. These decisions come as many automakers are choosing to shift EV production to countries with lower manufacturing costs.
As part of the agreement too, Audi has extended its job security guarantee for remaining employees at its German locations until the end of 2033.
Joerg Schlagbauer, head of Audi’s works council, acknowledged the challenging nature of the negotiations, stating, “The negotiations were tough, but always factual and solution-oriented… we had to make compromises to allow financial flexibility for additional investments.”
