German luxury car manufacturer Audi has announced plans to eliminate 7,500 jobs in Germany by the end of 2029 as part of a broader initiative to save over €1 billion ($1.09 billion) annually. The decision follows extensive negotiations between the company and the works council, which initially opposed larger job reductions.
Strategic Workforce Adjustments
Despite the workforce reductions, Audi’s job security program has been extended until the end of 2033, ensuring that no compulsory layoffs will occur before then. Instead, the company will rely on voluntary redundancies, contract expirations, and natural attrition to achieve the planned job cuts.
“Audi needs to become faster, more agile, and more efficient. One thing is clear: this won’t be possible without workforce adjustments,” said Gernot Döllner, Chairman of the Management Board.
Investment in German Sites & Focus on Electric Mobility
As part of its restructuring, Audi has also committed to investing €8 billion into its German production facilities in Ingolstadt and Neckarsulm. These investments are aimed at preparing the company for the transition to electric mobility, enhancing flexibility and resilience in the evolving automotive industry.
“We are positioning Ingolstadt and Neckarsulm to be robust and flexible for the challenging transition to electric mobility,” Döllner added.
Distribution of Job Cuts & Financial Impact
The first 6,000 jobs will be cut by 2027, with the remaining 1,500 positions eliminated by 2029. Audi has yet to clarify how these reductions will be distributed between its two main German sites.
In addition to workforce reductions, Audi plans to revamp its employee profit-sharing scheme, which will be reduced for several years as part of the cost-saving strategy.
- In 2023, Audi paid out €8,840 per employee under the scheme.
- The 2024 payout (for 2023 performance) will remain unaffected, but future distributions are expected to decline due to financial struggles.
Financial Challenges & Declining Profits
Audi’s financial difficulties have been attributed to several factors:
- Supply chain disruptions affecting key engine components.
- Weak demand in China, a critical market for the brand.
- Provisioning costs related to the closure of its Brussels plant.
The company’s profit nearly halved in the first nine months of 2024, and its full-year financial report, set to be released on Tuesday, is expected to reflect these ongoing struggles.
Works Council’s Perspective & Workforce Protections
Jörg Schlagbauer, Chairman of the Works Council, confirmed that despite these reductions, regular salaries, bonuses, and scheduled wage increases will remain unchanged.
Schlagbauer also pointed out that Audi’s commitment to producing the Q3 SUV at Ingolstadt is a significant victory for securing the future of the plant.
Additionally, 1,000 jobs will be reinstated through in-sourcing, a process where previously outsourced roles are brought back into the company, offering some relief amid the job reductions.
With Audi’s transition towards electric vehicles, the €8 billion investment in production sites is expected to strengthen its competitive edge. However, the company faces economic headwinds, supply chain challenges, and evolving market dynamics, making this restructuring a critical move for long-term stability.
