German carmaker Audi has struck a deal with its workers' union to cut up to 7,500 jobs by 2029 as the Volkswagen subsidiary faces slowing demand and increasing competition from China.
"The economic conditions are becoming increasingly tougher. Competitive pressure and political uncertainties are presenting the company with immense challenges," Audi said in a statement on March 17.
Audi Chief Executive Officer Gernot Döllner said the German premium carmaker must "become faster, more agile, and more efficient" and that this "won’t be possible without staff adjustments."
The job cuts represent about 14% of Audi's workforce. According to Reuters, layoffs will impact employees in the carmaker's administration and development divisions but will not include factory workers.
Notably, the job cuts will be implemented through voluntary redundancies and contract expirations rather than direct layoffs. The company said its current job security program, which prevents compulsory redundancies, will be extended until the end of 2033. It was originally set to expire in 2029.
CEO Gernot Döllner noted, "There will be no compulsory redundancies up to the end of 2033. In difficult economic times, that is good news for all employees."
Struggling German Auto Giant
This is not the first time Audi has announced large job cuts. The company has already cut 9,500 jobs since 2019 to invest in the shift to EV production and improve its margins.
However, according to Reuters, Audi's operating margin fell to 4.5% in the first nine months of 2024 from 7% a year earlier due to weak sales and production shutdown costs at its Brussels plant. Full-year results are due Tuesday.
The latest job cuts aim to save Audi $1.1 billion per year in the medium term.
The Volkswagen subsidiary has also announced plans to invest $8.7 billion in its German sites over the next four years.
Audi plans to produce a new entry-level EV in Ingolstadt and may add another in Neckarsulm, easing labour concerns over carmakers shifting EV production abroad.
Its job cuts add to the sector’s woes in Germany, hit by weak demand, competition from China, and the threat of US tariffs. Across Volkswagen Group, planned layoffs now near 48,000, including 35,000 at the namesake brand, 3,900 at Porsche, and 1,600 at software unit Cariad.
Volkswagen CEO Oliver Blume is pushing cost cuts to boost competitiveness, striking a deal last year to reduce staff and capacity at the VW brand.
