AUTONEWS

New blow to German auto sector as Audi announces job cuts

Premium carmaker Audi said Monday it will cut 7,500 jobs by 2029 in Germany, citing "immense challenges" as the country's auto industry battles slowing electric vehicle demand and rising Chinese competition.

The cuts—amounting to about 8% of Audi's global workforce—were aimed at boosting "productivity, speed and flexibility" at its factories in its home market, the manufacturer said.

"The economic conditions are becoming increasingly tougher, competitive pressure and political uncertainties are presenting the company with immense challenges," Audi, a subsidiary of Volkswagen, said in a statement.

It is the latest bad news from the ailing auto sector in Europe's biggest economy, which has been hit hard by a stuttering shift to electric cars, fierce competition in key market China from local rivals and weak demand.

Audi, headquartered in the Bavarian city of Ingolstadt, said the cuts would be in areas like administration and development and be carried out in a "socially responsible" manner, meaning there would be no compulsory layoffs.

The automaker employs about 88,000 people worldwide, including 55,000 in Germany.

The job cuts are part of a series of measures, which also includes slashing bureaucracy, that Audi said were aimed at saving it one billion euros ($1.1 billion) a year.

The carmaker however also said it was planning to plow about eight billion euros into its two biggest sites, Ingolstadt and Neckarsulm in Germany, in part to help in the transition to electric vehicles (EV).

This would include investments in producing another electric model in the entry-level segment as well in artificial intelligence.

Audi has been hit hard by slowing EV demand, and in February closed a plant in Belgium that employed about 3,000 people and manufactured high-end electric vehicles.

The carmaker's deliveries of fully-electric vehicles slid 8% year-on-year in 2024, to some 164,000.

Deliveries in the Chinese market, accounting for nearly 40% of the global total, slipped by about 11%.

Audi's parent company Volkswagen—which makes 10 brands in total—announced in December it would cut 35,000 jobs at its namesake VW brand in Germany by 2030.

In agreement with the company's works council in Germany, Audi will eliminate 7,500 jobs in its home country from now until 2029. The cuts, announced this Monday, the 17th, will affect non-productive areas, such as administration and development. Volkswagen's luxury division — which is also investing €8 billion in the operation over the next four years — estimates that the reduction in staff could represent savings of around €1 billion each year. 

The company, however, has already seen the dismissal of 9,500 employees since 2019. The measure joins the cost reduction program of the entire Volkswagen Group, which, in addition to reducing local production capacity, plans to eliminate around 48,000 jobs in Germany in the coming years, with Volkswagen cutting 35,000 jobs and Porsche, 3,900. 

In order to reach an agreement with the workers, Audi guaranteed job security for the remaining employees until December 31, 2033. It also confirmed plans to produce a new entry-level electric model at the Ingolstadt plant, a unit that will share the new generation of the Q3 with the Hungarian plant in Győr, and also admitted to studying another combustion model at the Neckarsulm plant.

“The negotiations were difficult. We had to make concessions to allow financial flexibility for additional investments,” said Joerg Schlagbauer, head of the works council.