Audi cuts 9,500 jobs to finance turn in electric

Factory of the Audi car manufacturer, in Ingolstadt, Germany, on November 26.Some 44,000 employees work on this site. Matthias Schrader / AP

After a grueling year marked by low sales and the repercussions of an endless diesel scandal, the rumor of a program of job cuts at Audi had been swelling for several days already. The decision is now taken: the manufacturer will separate 9,500 employees in Germany by 2025. This downsizing should result in early retirement that will not be replaced, said Tuesday, November 26, the Volkswagen's high-end subsidiary (VW) in a statement. Thanks to these departures, which represent 15% of Audi's 61,000 employees in Germany and 10% of its worldwide workforce, the four-ring brand hopes to achieve € 6 billion in annual savings by 2029.

These cost reductions will allow it to stay in "the target corridor from 9% to 11% operating margin , " says the manufacturer. The billions saved "will be reinvested in promising projects such as electrification and digital transformation" .

Following lengthy negotiations with employee representatives, Audi management agreed to extend a job safeguard clause, which, until 2029, rules out the threat of any redundancy for employees who will remain after departure plan. "The extension of the job guarantee is a great success at this difficult time," said Peter Mosch, chairman of the works council.

Indeed, the times are hard for Audi. With VW, its parent company, the Bavarian manufacturer is the starting point for the diesel engines, the famous "dieselgate". Embroiled for four years in this sprawling scandal, Audi has seen sales fall compared to those of its two main competitors. Thus, while it was until 2014 equal game with BMW and Mercedes-Benz, its annual sales stagnate around 1.8 million cars per year since 2015, far behind its rivals of all, who have since 2016 bar of 2 million vehicles sold.

"The diesel scandal has mobilized a lot of energy among Audi employees and at the management level," says Stefan Bratzel, director of Bergisch-Gladbach's Center of Automotive Management (CAM). True, Daimler and other automakers have also been splashed by the "dieselgate". But, according to the expert, Audi still has not escaped. On November 8, the German automotive regulator, KBA, ordered the recall of 40,000 diesel-powered Audi cars. This tenth recall now brings to 212,000 the number of vehicles of the manufacturer affected by the scandal in Germany. "Audi has not been as responsive as its competitors," says the expert.